Australia, China Stress Importance Of A Bilateral FTA

by Mary Swire, Tax-News.com, Hong Kong

23 June 2010

During China's Vice President, Xi Jinping's visit to Australia, both he and Simon Crean, Australia’s Minister for Trade, confirmed the commitment of their respective governments to completing a bilateral free trade agreement (FTA) between their countries.

In a speech to the Australia-China Economic and Trade Cooperation Forum in Canberra, Simon Crean said that the speed with which the Australia-China economic relationship is progressed is astonishing. China is Australia’s largest two-way trading partner, and last year also became its largest export partner. Two-way trade is now valued at AUD85bn (USD75bn), or nearly 17% of Australia’s total trade.

However, he said that Australia’s economic relationship with China is becoming “so much more than just trade in resources”. He is of the opinion that two-way investment flows are also critical. Since the government came to office in December 2007, he disclosed that Australia has approved around AUD60bn of Chinese investment, with more than 170 Chinese investment proposals approved during that period. None have been rejected.

In addition, Australian investment in China has also increased, to about AUD7bn in 2008. This, he indicated, is an area where Australian companies need to do more to seize the opportunities available.

He said that it is in Australia’s interest to “secure the basis for a modern investment framework delivered through successful FTA negotiations.” In his opinion, Australia and China have a “shared interest in concluding a comprehensive, high quality, treaty-based framework that goes beyond trade in goods to encompass services and investment”.

“The negotiations are challenging because China has not previously negotiated an FTA with a country that has such extensive interests in agriculture, resources, services and investment,” he added. “Nevertheless progress has been made. I’m convinced we can deal with the sensitivities, just as we did in concluding the FTA with ASEAN.”

He confirmed that the countries’ FTA negotiators are meeting again in Beijing later this month for their 15th meeting since their beginning in 2005, and hoped that Xi Jinping’s visit to Australia would provide further momentum to their talks.

During a later speech, Xi Jinping confirmed that the Chinese government is also looking to complete a bilateral FTA with Australia. Matching Australia’s increasing natural resource exports to China, particularly iron ore, coal and natural gas, with China’s increasing industrialization, he agreed that both countries have a strategic interest in completing an FTA as soon as possible.

During Xi Jinping’s visit, a total of ten new investment agreements were signed, covering projects worth more than AUD10bn, with seven related to the resources and energy sectors. Their completion, in the words of Kevin Rudd, Australia’s Prime Minister, “reflects the strong and growing cooperation between Australia and China”.

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