According to a report released by Australian Wool Innovation Limited (AWI), the wool industries in both Australia and China have much to gain from a Free Trade Agreement (FTA) between the two countries.

The report by ITS Global reportedly showed that the Australian wool industry could expect that the inclusion of wool in an Australia-China FTA would result in an increase in wool production of up to 10% and increases in farm cash income of up to 7% over and above that which would occur without an FTA.

The report was commissioned by AWI to investigate the impact of an Australia-China FTA on the industries both in Australia and in China. It found the industries in both countries were complementary, with Australia supplying 75% of China’s wool needs and China taking some 50% of Australia’s total wool exports.

AWI also announced a China Free Trade Committee, a sub group of the broader AWI Trade Committee, which will be responsible for liaising with government and informing the Australian wool industry as the negotiations progress.

Chair of the committee and deputy chair of AWI, Brian van Rooyen, said it was critical that the Australian industry understood the importance of this issue. "The industries in both countries have much to gain from wool’s inclusion in an Australia-China FTA. Over the next five years China will command 62% of global apparel wool demand. If Australia is to benefit from this expansion, restrictions to trade must be removed."

A global tariff rate quota system currently operates on greasy and lightly processed wool. Wool sold over and above the quota incurs a duty of 38% which is said to create a significant disincentive for demand for Australian wool once the quota has been reached.