China, Australia in free trade deal
Print Edition
CHINA and Australia sealed a landmark free trade agreement more than a decade in the making yesterday, significantly expanding ties between the world’s second largest economy and one of Washington’s closest allies in Asia.
The deal, which Australia called the best ever between China and a Western country, will open up Chinese markets to Australian farm exporters and the services sector while easing curbs on Chinese investment in resource-rich Australia.
Chinese President Xi Jinping and Australian Prime Minister Tony Abbott signed a memorandum of understanding clinching the agreement during a ceremony at the parliament in Canberra.
“This has been a 10-year journey, but we have finally made it,” Abbott said.
Xi praised the deal in an address to the Australian parliament, pledging to deepen cooperation with Australia.
“As long as we have our long-term and the larger interests in mind, increase positive factors and remove obstacles we will certainly forge a closer and more comprehensive strategic partnership between us,” he said.
Xi said the agreement reflected a “new level” in bilateral ties, which was upgraded to “comprehensive strategic partnership” status.
“As the Chinese saying goes ‘it takes 10 years to sharpen a sword’ so we are very glad to see that after nearly 10 years of negotiation our two sides have announced the substantive conclusion to the bilateral FTA negotiation,” Xi said.
“This will provide a bigger market, more favorable conditions and better institutional support for our cooperation.”
China won concessions on foreign investment, with Abbott announcing that the threshold for government review would be lifted from A$248 million (US$216 million) to more than A$1 billion in “most areas” apart from agricultural land and agribusiness.
China is already Australia’s top trading partner, with two-way trade of around A$150 billion in 2013. Yesterday they witnessed 14 commercial agreements between companies potentially worth more than A$20 billion.
The leaders also pledged to work jointly to combat climate change by sharing technology aimed at improving the efficiency of coal.
Australia needs China’s help to transition from a reliance on exports of minerals such as coal and iron ore to expanding its food and agricultural exports to a growing Asian middle class, moving from a “mining boom” to a “dining boom.”
Once the agreement is fully implemented, 95 percent of all its exports will enjoy duty free entry into China.
The agreement gives Australia’s dairy farmers tariff-free access within four years to China’s infant formula market, minus any of the “safeguard” caps that restrict competitors from New Zealand.
Wine makers, currently selling more than A$200 million worth of goods to China each year, will see tariffs eliminated over four years, while a 3 percent coking coal tariff will be removed immediately and a 6 percent tariff on thermal coal within two years.
Dairy companies, including Canada’s Saputo Inc, which owns Warrnambool Cheese and Butter Factory Company Holdings Ltd, and Bega Cheese Ltd are among likely leading beneficiaries of the deal.
Health and aged care providers, such as Japara Healthcare and private hospital operator Healthscope will get a jump on providers from Japan, the US and Europe, while financial services companies ANZ Bank and IAG will get a boost from preferential access.
Andrew Forrest, chairman of Fortescue Metals, said the agreement would be the most significant trade deal Australia has done. “We can offer Chinese consumers the highest quality produce and Chinese consumers can be confident in the reliability of supply and food safety,” he said.
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