2009 – Closing the Gap

It is almost four years since the first round of negotiations was held in Sydney in May 2005, and through many hours of intensive discussions the structure of a possible deal is beginning to take shape. This should set the scene for intensified engagement on the key market access issues that lie at the heart of the FTA reports Australia’s chief negotiator, Ric Wells.

In December, the 13th round of negotiations for an Australia-China free trade agreement were held in Beijing. 

For goods, both China and Australia are continuing to talk about the products China has characterised as sensitive. In the coming meetings, we will keep pressing China to show flexibility on agricultural products of interest to Australia. Australia will similarly continue to press for commercially-focused outcomes across a broad range of services sectors.

Australia’s trade, investment and economic ties with China are very important, particularly in these times of economic uncertainty. China is Australia’s top trading partner, with trade in goods and services worth $63.8 billion in 2007-2008.

As a sign of Australia’s political commitment to an Australia-China FTA, the Trade Minister, Simon Crean and the Treasurer Wayne Swan flew to Beijing for negotiations in December 2008. As well as discussing efforts to advance the FTA negotiations, the ministers raised the international response to the global financial crisis, the role of the G20 and the Doha Development Round. Mr Crean and Mr Swan met senior Chinese officials, including China’s Minister for Commerce, Chen Deming and the Chairman of China’s National Development Reform Commission, Zhang Ping. The Ministerial trip underscores the Australian Government’s willingness to engage internationally, and its commitment to trade liberalisation.

Some very useful discussions were also held in regards to the services sector.

Education and training is Australia’s biggest services export to China. On this issue, Australia and China talked about launching a study into qualifications recognition – how it might proceed and what the aims of the study might be. Australia is asking China to expand the list of Australian education and training institutions on China’s official JSJ “Study Abroad” website. China will consider this, and has also given Australia a revised list of requests relating to education.

Banking, securities and fund management services were all discussed. China took a constructive approach to our requests for the facilitation of licences and other approvals for Australian financial institutions. However, China indicated that other areas, such as preferential or faster access for Australian institutions will be more difficult to secure.

We expressed a strong interest in Australian legal firms in China being able to enter into voluntary commercial associations with Chinese firms, on a trial basis. China was concerned that Chinese authorities may not be able to prevent Australian firms, included in such a trial, from practicing domestic Chinese law. We outlined the safeguards which are built into the structure of the trial, but China remained concerned. Australia will continue to push this issue, including at a political level.

Australia put forward a proposal for a commercial association model for accounting firms from Australia and China. We also discussed the option of mutual recognition arrangements (MRAs) in professional services such as engineering, architecture and urban planning – but it is not clear there’s sufficient industry interest on both sides for negotiators to pursue it.

Australia has tabled more requests relating to mining services, after our assessment of China’s commitments in this area in the China-Chile FTA. Australia is also pursing greater facilitation of mining investments.

China again expressed its interest in how the FTA might address Australia’s screening of government-related investment, and access to railway and port infrastructure for Chinese mining investors. Australia emphasized the openness and non-discriminatory nature of our investment screening and infrastructure access regimes, and highlighted the sensitivity of China’s requests. China tabled extra requests relating to investment screening and geological standards.

Of the chapters of the agreement that would set down the rules for trade in goods between the two countries, we expect to be able to reach agreement on the substance of those on technical barriers to trade, and sanitary and phytosanitary issues early this year. These chapters will reaffirm our World Trade Organization rights and obligations, and provide more opportunities for co-operation and consultation with China.

Work on the chapter concerning customs procedures is also virtually completed. China introduced a new proposal on customs co-operation that we will need to consider, but most of the chapter is now agreed. Officials have made limited progress in discussion on the rules of origin chapter text, and we also held talks about product-specific rules of origin. This aspect of the negotiation is resource intensive and will require more work.

We have also made some progress in the discussion on the trade in goods chapter, with most of the basic concepts now well understood on both sides. On safeguards, China’s preference is for an approach based closely on WTO disciplines; while on trade remedies more broadly, we made it clear Australia would not consider constraining WTO rights. 

Government procurement continues to be very difficult to advance, and is further complicated by China’s current application for membership of the WTO Agreement on Government Procurement, which is likely to involve a very prolonged process.

In the coming months we will keep discussing China’s request for greater access to Australia’s temporary entry provisions, and its interest in traditional Chinese medicine.

The 14th round of negotiations are expected to take place in the coming months.

For more information, contact the China FTA Taskforce:

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