Problems relating to Trade and Investment on Australia

1. Restrictions on entry of foreign capitals
Issue	Issue details	Requests	Reference

(1) Ambiguous FIRB Approval Standard on M&A by FFEs	- Approval of the Foreign Investment Review Board (FIRB) is necessary on major M&A acquisition by Foreign Funded Enterprises (FFEs). The FIRB judgement basis is quite ambiguous, devoid of transparency. While in the case of the member firm, there has been no such precedence, a while ago, Archer Daniels Midland (ADM), a major concern in grain business in the U.S., had reached agreement for purchase of GrainCorp. However, in the end, FIRB rejected the transactions. - A foreign investor into Australia must obtain approval of the Foreign Investment Review Board (FIRB). It takes substantial time and cost to file application at FIRB, which is quite burdensome when investing in Australia.	- While needs for FIRB approval cannot be denied, it is requested that FIRB clarifies the basis of its judgement.	- The Foreign Acquisitions and Takeovers Act 1975 (Cth) - The Foreign Investment and Takeover Regulations 1989
	(Action) - Department of Finance promulgated on 17 February 2008 Guideline for screening by FIRB, etc. on whether the direct investment applications by foreign government or foreign governmental agencies are "contrary to the national interest". - On 18 December 2008, GOA exempted notification requirement for an alien's acquisition of a housing property as his/her own residence. - On 29 November 2013, Government of Australia (GOA) rejected A$2.8 billion ($2.55 billion) takeover of GrainCorp (GNC.AX) by Archer Daniels Midland (ADM), a U.S. agribusiness giant, bowing to the pressure from grain growers in a rare and surprising decision. GOA rejected Archer Daniels Midland's plan for acquisition of GrainCorp, an Australian grain dealer for A$2.8 billion (the U.S. $2.55 billion). Treasurer Joe Hockey said he was rejecting the proposal on national interest grounds after Australia's Foreign Investment Review Board (FIRB) failed to reach a consensus recommendation. While he sees no problem about the increase in ADM's capital contribution ratio from the current 20% to 25% approx., he added: "Many industry participants, particularly growers in Eastern Australia, have expressed concern that the proposed acquisition could reduce competition and impede growers' ability to access the grain storage, logistics and distribution network," Hockey told to reporters in Sydney. (Reuter, Sydney, 29 November 2013) - Under the Federal Laws, "The Foreign Acquisitions and Takeovers Act 1975 (Cth)" and "The Foreign Acquisitions and Takeovers Regulations 1989", GOA may reject foreign funded investments, which GOA finds to be "adverse to the national interests". What constitutes "adverse to the national interests" is determined on each case, after careful consideration of various issues broadly, including impact upon Australian economy, society, national security, competition in the industry, and other governmental policies across-the-board.
	(Improvement) - In August 2009, the Minster for Finance and Deregulation deregulated Control on Direct Investment into Australia by: (1) Repealing the FIRB's prior approval requirement for establishment of a new company of more than A$10 million, and (2) Repealing the FIRB's prior approval requirement for investment into an enterprise with net worth of more than A$219 million. - Under Japan Australia Economic Partnership Agreement (JAEPA) enforced in January 2015, FIRB examination basis has been deregulated. It has raised the investment amount into Australia of non-sensitive area from Japan from A$204.48 million to A$1.780 billion. However, investment into farming land and agri-business is A$15 million. EPA does not apply to investment into state enterprises, all of which is subject to FIRB examination.

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