Chapter 11 - The proposed Australia–China free trade agreement
11.1
This
chapter examines the proposed Australia–China free trade agreement (FTA). On 18 April
2005, the Australian
Prime Minister, the Hon. John Howard, and the Chinese Premier, His Excellency Mr Wen Jiabao, agreed to
commence negotiations on an FTA. Prime Minister Howard described the possibility of an FTA with China as a 'desirable next step in this already
very substantial trading relationship'.[731]
Both countries have recently completed FTAs with other nations: Australia with Singapore, Thailand and the United States; and China with the Association of South East Asian
Nations (ASEAN).[732]
11.2
In
addition to its discussions with China, Australia is in the early stages of FTA negotiations
with Malaysia, Japan and the United Arab Emirates; China is currently negotiating an FTA with Chile, Singapore, South Africa and the Gulf Cooperation Council (see Table
11.1).
Table 11.1: Australian and Chinese FTAs
|
Australia FTAs
|
China FTAs
|
Signed and implemented
|
New Zealand
Thailand
Singapore
United States
|
ASEAN
|
Currently negotiating
|
China
Malaysia
United Arab Emirates
|
New Zealand
Australia
South Africa
Chile
Singapore
Gulf Cooperation Council—UAE, Bahrain, Kuwait, Oman, Qatar and Saudi
Arabia
|
Proposed negotiations
|
Japan (feasibility study)
|
|
11.3
This chapter is divided into three parts:
-
the conditions
that need to be satisfied to negotiate an Australia–China FTA under WTO rules;
-
the recent joint economic
modelling for an Australia–China FTA; and
-
the March 2005 DFAT
feasibility study on an Australia–China FTA.
Satisfying the conditions for an Australia–China FTA
The early debate in Australia on an
FTA with China
11.4
The proposal for an Australia–China FTA is relatively
new. In 1999, the Leader of the Opposition and the Federal Labor Party, the Hon.
Kim Beazley,
raised the issue of a trade treaty with China's
President Jiang Zemin.
Following a positive response at this meeting, the Shadow Minister for Trade,
Senator the Hon. Peter Cook,
proposed the idea publicly. In October 2000, Senator Cook
pledged that the Labor Party would:
...upon returning to Government, seek to negotiate with the
Government of China a comprehensive bilateral trade and investment framework
agreement...We will be proposing to the Chinese that the two countries jointly
undertake a thorough examination of the potential for closer, practical trade
and investment links...[733]
11.5
Senator Cook highlighted the complementarity of the
Australian and Chinese economies. The Labor Party intended to use an FTA with China
as a way to revitalise the Asia–Pacific Economic Cooperation (APEC) forum. It
was also intended as a statement of strategic intent about Australia's
role in the region.[734]
11.6
At that time, the Australian government's efforts were
concentrated on signing various Memoranda of Understanding relating to trade
and investment in the mining and energy sectors and cooperation in science and
technology.[735] In 2002, the federal government
took the first positive steps toward an FTA with China
when it agreed to start work on a trade and economic framework agreement with China
(see paragraph 11.22).
Market economy status and
anti-dumping laws
11.7
The Chinese government has made known that nations
wishing to sign a bilateral agreement with China
under Article XXIV of the GATT must accord China
'market economy status' (MES). The vast majority of WTO members have MES. China,
however, under the terms of its WTO accession, is to be treated as a 'non
market economy' until 2016.
11.8
For practical purposes, the term 'market economy
status' is generally only used in relation to anti-dumping investigations. As
noted in chapter 6 (paragraph 6.48), 'dumping' refers to a situation where 'the
export price of a product exported from one country to another is less than the
comparable price...for the like product when destined for consumption in the
exporting country'.[736] The WTO Anti-Dumping
Agreement, based on Article VI of the GATT, requires the aggrieved party to
show that there is genuine injury to the competing domestic industry.[737] Where this is demonstrated, WTO rules
allow a member nation to impose anti-dumping duties against the dumped goods to
the value of the margin between the export price and the 'normal value' of the
product.
11.9
The calculation of the 'normal value' of a product is
determined by national anti-dumping legislation. How this calculation is made
depends on the status of the importing country (see paragraph 11.11). In
theory, there will be fewer anti-dumping investigations against countries with MES
than without it. A country with MES is less likely to receive a positive
dumping finding than a country with non-market economy status.[738]
Australian anti-dumping rules
11.10
Anti-dumping rules are a contentious issue in the
Australia–China bilateral relationship. In the decade since 1994–95, Australian
industry has initiated 18 anti-dumping actions against imports from China.[739] As discussed below, China
was willing to open FTA negotiations with Australia
only on the condition that it is treated as a market economy for anti-dumping
purposes under Australian law.
11.11
Australian law does not explicitly mention MES or non-MES.
However, subsection 269 of the Customs
Act 1901 does define three categories of country for anti-dumping purposes,
and the basis for measuring the 'normal value' of their imports.
-
A country with non-market economy status is
identified in subsection 269TAC(4) as a country where the government has 'a
monopoly, or substantial monopoly, of the trade of the country [and] determines
or substantially influences the domestic price of goods in that country'.[740]
-
A country with 'economy in transition' status is
identified in subsection 269T(5C) as a country where government once had a
monopoly on trade and pricing, but does not currently. As in the European Union
(EU), 'normal value' for non MES importers is based on a comparable country's
import price.[741]
-
A country with market economy status is
identified under subsections 269TAC(1), (2) and (6). Section 1 assesses the
'normal value' of an import from a country with MES as the price in the
exporter's domestic market. Subsection 2 notes that where the information
appropriate to subsection 1 is not available, 'normal value' will be calculated
based either on production costs in the country of origin or the comparable
price of the like product when exported to an appropriate third country.[742]
The decision to award China
market economy status
11.12
In April 2005, Australia
awarded China
'market economy status' under WTO definitions. Australian interests were
clearly focused on an FTA and, as noted earlier, China
had made it clear that it was unwilling to negotiate unless it was accorded MES
under Australian anti-dumping legislation.[743]
As the Australian Minister for Trade, the Hon. Mark
Vaile, explained on 13 April 2005:
I believe the time is right for Australia to move into free trade negotiations with China...Australia must be at the front of the queue in this market. The Chinese
economy grows stronger by the day and Australia simply cannot afford to be left behind.[744]
11.13
The main effect of Australia's
decision is that Chinese imports will now be judged no differently for anti-dumping
purposes to imports from the US
and the EU. Prior to April 2005, Australia's treatment Chinese exports for
anti-dumping purposes was as an 'Economy In Transition' (EIT), and therefore
used 'third country' measures for anti-dumping cases.
11.14
There were mixed views about the decision to give China
MES. The Australian Services Roundtable was 'strongly supportive' of the
Australian government's decision.[745]
It emphasised that the announcement would overcome the threshold obstacle to
commencing FTA negotiations. The group also argued that according China MES
will not 'deprive Australian producers and manufacturers of adequate remedies
in the event of any future dumped imports'.[746]
11.15
This argument was also put by Mr
Andrew Stoler,
the Executive Director of the Institute for International Business and Law at
the University of Adelaide.
Mr Stoler
claimed the decision 'would in no material way affect Australia's
ability to protect industry against legitimate cases of dumping and arrive at
accurate antidumping margins'.[747] To
argue otherwise, he claimed, is to suggest that WTO rules on anti-dumping are
deficient.
11.16
Mr Stoler
argued that the calculation of 'normal value' based on either MES or EIT is a
procedural issue: it should not affect the accuracy of dumping margins. The
interests of Australian industry will be protected from dumping regardless of China's
anti-dumping status. Equally, Mr Stoler
also insisted that Australia's
MES provisions will treat China
no differently from other nations accorded the same status. Even when China
had EIT status, he claimed it was 'a distinction without a difference'.[748]
11.17
Prior to the April 2005 announcement, the Australian argued that although China's
MES 'would make it harder for our manufacturers to invoke anti-dumping
rules...the real issues...go to the heart of China's transitional economy'.[749] The editorial insisted that the
development of China
as a fully developed market economy will depend 'less on technical rules about
predatory pricing than on evidence of movement towards internal
liberalisation'.[750]
Australian opposition to China's
'market economy status'
11.18
There was also strong opposition to the decision within
Australia. Some
expressed concern that the Howard government had
played its trump card too early, given that the lure of MES could give Australia
important leverage in FTA negotiations. The main opposition has come from
manufacturing interests. The Australian Industry Group (AiG) campaigned
strongly to ensure that domestic manufacturers were protected from Chinese
dumping under an FTA. The Group's Chief Executive, Ms
Heather Ridout,
explained in March 2005 that AiG had had discussions with the Australian government
to put arrangements in place that would protect Australian industry. This, in
turn, will 'remove a major barrier to declaring China
a market economy'.[751]
11.19
The Australian Manufacturing Workers Union (AMWU) and
the Australian Council of Trade Unions (ACTU) both made submissions to the
committee which insisted that the proposed Australia–China FTA must protect
Australian industry from dumping of Chinese imports. The ACTU's submission
noted that the issue of dumping has featured prominently in the public debate
on China's
'illegitimate cost advantages'.[752] It
expressed the ACTU's concern that an Australian FTA with China
would significantly lessen the burden of proof for Chinese importers in
anti-dumping cases. Mr Doug
Cameron, the National Secretary of the AMWU,
told the committee:
We are concerned about dumping. We do not believe that we should
have given market economy status to China—there
is absolutely no reason for that. The definition that the United
States gives to the term 'market economy'
should be at least the minimum position that we adopt in terms of market
economy status.[753]
11.20
In the event, the announcement of MES shortly preceded
the concessions for Australian manufacturers. In May 2005, the federal
government amended the Customs Manual to allow officials to investigate the
effect of government influence on the price of any goods coming into Australia
from China.[754] Indeed, the change will allow the
Australian government to investigate the price of imports from any country,
regardless of its status. The main difference in the treatment of EIT and MES
status economies for Australian anti-dumping purposes, therefore, is in the
investigation of prices: the basis for assessing ‘normal value’ is unchanged.
Committee view
11.21
The committee believes the Australian government made
the correct decision in awarding China MES. It does not believe that this decision
will impact adversely on Australia's
capacity to prove that Chinese imports have been dumped. The committee
recognises that there are several issues that concern the international
community regarding China's
transition to a market economy. However, it does not believe that withholding MES
is an appropriate or adequate response to these concerns.
The Australia–China Trade and
Economic Framework
11.22
In May 2002, Minister Vaile
and the Chinese Vice Minister for Commerce, Mr
Yu Guangzhou,
signed an agreement to start work on a new framework agreement 'to enhance the
economic and trade relationship'.[755]
11.23
On 24 October
2003, the Trade and Economic Framework agreement was signed in Canberra
between Prime Minister John Howard
and President Hu Jintao,
with Ministers Vaile and Yu also present. The Framework strengthens the
Australia–China Joint Ministerial Economic Commission and improves the
commercial and policy linkages between Australia
and China
across a range of sectors.
11.24
Potentially the most significant outcome of the
Framework was both governments' commitment to study the feasibility and
benefits of an Australia–China FTA. It was agreed that this study was to be
completed by October 2005 and would provide the basis for deciding whether to
negotiate an FTA.
Modelling the FTA
11.25
A team of Australian and Chinese economists conducted
the economic modelling for an Australia–China FTA. The Australian Department of
Foreign Affairs, Defence and Trade (DFAT) commissioned Dr
Yinhua Mai
and Professor Phillip
Adams from the Centre of Policy Studies at Monash
University. The Chinese Ministry of
Commerce (MOFCOM) commissioned Dr Mingtai
Fan from the Chinese
Academy of Social Sciences in Beijing
and Professor Ronglin
Li and Dr Zhaoyang
Zheng from Nankai
University in Balitai.
11.26
The March 2005 report simulates three aspects of an
FTA: the removal of border protection on merchandise trade, the impact of
investment liberalisation, and the removal of barriers to services trade. The
authors argued that these measures will increase capital, improve productivity
and better utilise both nations' resources. They estimated that the removal of
these trade barriers will add $US18 billion to Australia's
real GDP and $US64 billion to China’s
real GDP between 2006 and 2015.[756]
For each of these years, an FTA will directly contribute an increase of 0.39
per cent in real GDP to the Australian economy and 0.42 per cent to China's
real GDP.[757]
11.27
The model found that the greatest mutual benefit from
an Australia–China FTA is from a quick and comprehensive agreement. Slower
implementation would result in fewer benefits. The data presented in the tables
below assume comprehensive trade liberalisation in 2006. Compared with the
immediate removal of trade barriers, the model estimated that gradual
liberalisation between 2006 and 2010 would reduce GDP gains from an FTA by over
25 per cent.[758]
11.28
Table 11.2 shows the Australian goods and services that
attract a Chinese tariff of at least ten per cent, and the corresponding
Australian tariff on Chinese imports.[759]
It clearly illustrates that China
imposes tariffs on Australian goods and services at significantly higher rates
than the Australian levy on equivalent Chinese imports.
11.29
Chinese tariffs on Australian imports average 15.9 per
cent, compared with an average 3.3 per cent Australian tariff on Chinese
imports. Indeed, Australian tariffs on Chinese imports exceed ten per cent for
only two products—wearing apparel and dairy goods. Excluding these items, the
average Australian tariff on the remaining goods is only 1.8 per cent.
11.30
Table 11.3 shows the predicted impact in ten years'
time of removing restrictions on merchandise trade on both the Chinese and
Australian economies. It shows that if full liberalisation proceeds in 2006, by
2015, Chinese exports to Australia
will have increased by 7.3 per cent and Australian exports to China
by 14.8 per cent.
11.31
As one would expect, the impact of full trade
liberalisation is proportionately greater for the Australian economy as a whole
than for the Chinese economy. A comprehensive FTA would increase the overall
volume of Australian exports by 0.6 per cent, compared with a 0.2 per cent
increase in China's
exports. The overall volume of Australian imports would increase by 1.3 per
cent, compared with a 0.2 per cent increase in China's
imports. Australian real GDP would increase by 0.12 per cent compared with a
0.05 per cent increase in China's
real GDP.
Table 11.2: 2005 ad valorem percentage rates on bilateral
trade
Product / service
|
China's tariffs (over 10 per cent)
|
Australia's tariffs
|
Wheat |
30 |
0.0 |
Beverages and tobacco |
26 |
3.4 |
Sugar |
25 |
2.1 |
Wearing apparel |
16.7 |
14.8 |
Motor vehicles and parts |
16.3 |
5.2 |
Food products |
15.8 |
2.2 |
Oil seeds |
15 |
0.0 |
Wool |
15 |
0.0 |
Other meat |
14 |
1.0 |
Vegetable oils |
13 |
0.6 |
Fishing |
12.8 |
0.0 |
Meat: cattle,
sheep, goats |
12 |
0.6 |
Mineral products |
11 |
4.0 |
Metal products |
11 |
3.8 |
Processed rice |
10.6 |
1.7 |
Dairy products |
9.9 |
12.0 |
Source: Y. Mai et. al.,
'Modelling the potential benefits of an Australia–China Free Trade Agreement',
An Independent report prepared for the Australia–China Feasibility Study, 2 March 2005, p. 52.
Table 11.3: Impact (by 2015) of removing
merchandise tariffs in 2006
|
Australia (%) |
China (%) |
Chinese
exports to Australia |
|
7.3 |
Australian
exports to China |
14.8 |
|
Increase
in overall export volume |
0.6 |
0.2 |
Increase
in overall import volume |
1.3 |
0.2 |
Change
in real GDP (%) |
0.12 |
0.05 |
Change
in agricultural output (%) |
1.2 |
–0.1 |
Change
in mining output (%) |
0.2 |
0.0 |
Change
in manufacturing output |
0.2 |
0.1 |
Change
in services traded |
0.0 |
0.0 |
Source: Y. Mai et. al., 'Modelling
the potential benefits of an Australia–China Free Trade Agreement', An independent
report prepared for the Australia–China Feasibility Study, 2 March 2005, p. 54.
11.32
The modelling also computed the sectoral impact of a
comprehensive FTA on both economies. Full trade liberalisation in 2006 would
increase Australian agricultural output in 2015 by 1.2 per cent, whereas the
Chinese agricultural sector would contract by –0.1 per cent. The Australian
mining and manufacturing sectors would both increase output by 0.2 per cent:
the Chinese mining sector would remain unchanged while manufacturing would
increase in size by 0.1 per cent.
11.33
Table 11.4 combines the effect of liberalising
merchandise trade, services trade and inward investment. The table shows that
the bulk of the anticipated increase in real GDP in both nations will come from
liberalising services trade and investment. On this measure, the welfare gain
to both China
and Australia
from a comprehensive FTA is very similar. The other notable feature of Table 11.4
is the projected increase that removing restrictions on services and investment
will have on China's
output in agriculture, manufacturing, mining and services. Table 11.3 shows
that removing barriers on merchandise trade alone will have minimal effect on
these Chinese sectors. Removing barriers on trade in services and investment,
however, will uniformly increase Chinese output in these sectors.
Table 11.4: Impact (by 2015) of removing all trade barriers in 2006
|
Australia (%) |
China (%) |
Chinese exports to Australia |
|
7.8 (+0.5) |
Australian exports to China |
15.1 (+0.3) |
|
Increase in overall export
volume |
0.9 (+0.3) |
0.5 (+0.3) |
Increase in overall import
volume |
1.5 (+0.2) |
0.4 (+0.2) |
Change in real GDP (%) |
0.37 (+0.25) |
0.39 (+0.34) |
Change in agricultural
output (%) |
1.3 (+0.1) |
0.2 (+0.3) |
Change in mining output (%) |
0.5 (+0.3) |
0.4 (+0.4) |
Change in manufacturing
output |
0.5 (+0.3) |
0.5 (+0.4) |
Change in services traded |
0.3 (+0.3) |
0.4 (+0.4) |
Source: Y. Mai et. al., 'Modelling the potential benefits of an
Australia–China Free Trade Agreement', An
independent report prepared for the Australia–China Feasibility Study, 2 March 2005, p. 64.
Figures in brackets are the increases accounted for by services and investment
liberalisation.
11.34
Table 11.5 examines this analysis for its impact on
Australian industry. The three columns plot the simulated effect of full trade
liberalisation in 2006 on industries' output, employment and import competition
from China in
2015. It shows that the Australian wool industry is likely to benefit
substantially from an immediate and comprehensive FTA with China.
By 2015, the Australian wool industry's output is expected to increase by 7.1
per cent, and employment by 9.2 per cent.
Table 11.5: Impact of full liberalisation in 2006 on Aust.
industries by 2015
|
Output (%) |
Employment
(%) |
Imports
from China (%) |
Agriculture |
1.2 |
1.4 |
1.8 |
Wheat |
0.4 |
0.4 |
n.s. |
Wool |
7.1 |
9.2 |
n.s. |
Mining |
0.2 |
0.0 |
0.6 |
Minerals |
0.7 |
0.5 |
1.7 |
Manufacturing |
0.2 |
0.0 |
8.1 |
Meat products |
0.4 |
0.5 |
n.s. |
Dairy products |
0.1 |
–0.1 |
n.s. |
Sugar |
1.8 |
1.7 |
n.s. |
Food products |
0.2 |
0.0 |
5.1 |
Textiles |
3.2 |
2.9 |
9.0 |
Motor vehicles |
–0.6 |
–0.8 |
31.5 |
Wearing apparel |
–5.5 |
–11.9 |
24.5 |
Source: Y. Mai et. al.,
'Modelling the potential benefits of an Australia–China Free Trade Agreement',
An independent report prepared for the Australia–China Feasibility Study, 2 March 2005, p. 56.
11.35
The contrast is with the wearing apparel industry,
which is forecast to reduce its output by 5.5 per cent and shed almost 12 per
cent of its current workforce by 2015. The model also predicts that several
Australian manufacturing industries will face more intense competition from
Chinese imports, particularly the car and wearing apparel industries. Notably,
the projected increase in the level of Chinese agricultural and mining imports to
Australia is
comparatively low at 1.8 per cent and 0.6 per cent respectively.
11.36
Table 11.6 shows the estimated impact of comprehensive
Australia–China trade liberalisation in 2006 on Chinese industries by 2015.
Again, the most notable aspect of the table is the anticipated fall in output
and employment in China's
wool industry. The small anticipated impact on other industries reflects that
the Chinese economy is much larger than the Australian economy. Still, Table 11.6
shows that the opportunities for Australian exporters from an FTA with China
will be significant in the wheat, wool, dairy, sugar, food products, car and
wearing apparel industries.
11.37
The modelling report conceded that some adjustment of
labour between sectors will occur following the removal of border protection on
merchandise trade. However, '[b]ecause of the complementarity of the two
countries...such reallocation of labour...tends to facilitate the natural course of
adjustment already occurring...'.[760]
Table 11.6: Impact of full liberalisation in
2006 on China's
industries by 2015
|
Output (%) |
Employment
(%) |
Imports
from Aust (%) |
Agriculture |
–0.1 |
–0.1 |
16.3 |
Wheat |
–0.1 |
–0.1 |
20.5 |
Wool |
–4.8 |
–6.9 |
19.2 |
Mining |
0.0 |
–0.9 |
6.6 |
Minerals |
–0.2 |
–0.5 |
6.4 |
Manufacturing |
0.1 |
0.0 |
20.3 |
Meat products |
0.0 |
–0.1 |
12.3 |
Dairy products |
–0.5 |
–0.6 |
27.1 |
Sugar |
–0.4 |
–0.8 |
40.2 |
Food products |
0.0 |
–0.1 |
33.9 |
Textiles |
0.3 |
0.1 |
17.2 |
Motor vehicles |
0.1 |
0.1 |
116.9 |
Wearing apparel |
0.4 |
0.1 |
93.0 |
Source: Y. Mai et. al., 'Modelling the potential benefits of an
Australia–China Free Trade Agreement', An
independent report prepared for the Australia–China Feasibility Study, 2 March 2005, p. 56.
The FTA Feasibility
Study—principles and conclusions
11.38
In March 2005, DFAT and MOFCOM released a joint
feasibility study into an Australia–China FTA. The study identified seven
principles that should guide the FTA negotiations. The agreement must:
-
allow the two sides to negotiate as equal
trading partners (hence Australia's recognition of China as a market economy);
-
be consistent with WTO rules, and take into
account APEC's goals for trade and investment liberalisation and facilitation;
-
go beyond WTO commitments and include products
across all sectors covering merchandise trade, services and investment flows,
'with a view to achieving a balanced outcome through a single undertaking';
-
be capable of delivering significant outcomes as
soon as it enters into force;
-
acknowledge that the nations are at different
stages of economic development with different adjustment costs;
-
include dispute settlement issues; and
-
include a timetable for periodic review.[761]
11.39
The Monash–Nankai universities' modelling was a major
input into the FTA feasibility study. Each of the feasibility study's five
conclusions drew from the econometric analysis. The study concluded that:
-
there are significant net trade and economic
benefits for both countries within a short timeframe;[762]
-
the positive impact of an FTA on output and
employment in both countries is significant, with structural adjustment
expected to be minimal (see above);[763]
-
the greater the scope and coverage of the FTA,
the greater the benefits;
-
the faster the implementation across goods,
services and investment, the greater the benefits; and
-
an Australia–China FTA would be trade-creating
for the world as a whole.[764]
11.40
Accordingly, DFAT and MOFCOM recommended that
negotiations on an FTA 'should begin as soon as possible'.[765]
Committee view
11.41
The committee supports Australia's
decision to sign an FTA with China.
It does not believe that the early concession of MES will leave Australia
without negotiating power in the FTA discussions. In principle, the committee
supports abolishing tariff and non-tariff barriers across all sectors within
the quickest possible timeframe. Chapters 4, 5, 6 and 7 noted the intransigence
of China's
non-tariff barriers and their affect on a range of Australian industries' to
export and invest in China.
This chapter noted Australia's
average tariff levels are significantly less China's
(see paragraph 11.28). However, as the next chapter observes, there is likely
to be significant opposition to rapid tariff reduction from the Australian
manufacturing sector and parts of both the Australian and Chinese agricultural
sectors. This opposition will be accentuated if Australian negotiators do not use
the FTA to address adequately China's
various non-tariff barriers (see chapter 12). The committee is pleased that the
FTA negotiations to date have engaged Chinese officials in discussion on these
issues (see paragraphs 11.45, 11.46 and 11.47).
Recommendation 13
11.42
The committee recommends that the Australian government
conclude an FTA with China
that abolishes tariffs and addresses the range of non-tariff or 'beyond the
border' issues. Australian negotiators must:
- ensure
that the FTA is comprehensive covering all sectors including the services
sector;
- assist,
wherever possible, with China's efforts to conform to WTO standards on
intellectual property rights;
- encourage
China to reduce its subsidies for local industry;
- encourage
China to adopt the WTO's SPS agreements for quarantine; and
- encourage
China to develop greater transparency and uniformity in its corporate tax
system.
The progress of negotiations (October 2005)
11.43
In 2005, DFAT conducted a number of public and
stakeholder consultations on the proposed Australia–China FTA. The department
also held the first two rounds of negotiations with MOFCOM officials.
11.44
On 23 May 2005, Trade Minister Vaile and China's Vice
Minister of Commerce, Mr Wei Jianguo, launched the first round of Australia–China FTA negotiations
in Sydney. These talks focussed on procedural issues and included an Australian
offer to provide training for Chinese officials on FTA negotiating processes
(see recommendation 2).[766]
11.45
In August 2005, the second round of negotiations was
held in Beijing.[767] This was divided
into four working groups: agriculture and quarantine;
trade in goods; trade in services; investment and trade facilitation issues. The purpose of
the discussions was for both sides to exchange information
about each other's trade and investment regimes. China's officials asked
questions to the Australian delegation about quarantine, foreign direct
investment, movement of natural persons, and anti-dumping. Australia emphasised
the need for relevant and up-to-date information about China's policies and
administrative regimes in all sectors.[768]
11.46
DFAT's review of these
discussions noted:
We used the session
on non-tariff barriers and industry assistance to raise issues of concern to
the Australian business community, in particular in relation to the kinds of
government assistance and subsidies provided to domestic Chinese industries.[769]
11.47
It
added:
On intellectual
property, the Chinese side was well prepared. We had a robust exchange not only
on technical issues but also on broader issues, especially enforcement and
concerns raised by Australian industry. Importantly, China revealed that it is
undertaking several reviews of its intellectual property laws, and accepted the
Australian offer to provide detailed materials for consideration in the reform
of China's intellectual property regime.[770]
11.48
The third round of negotiations was due to commence
on 31 October 2005. The committee shares the Australian government's insistence
that future negotiations must continue to consult widely with the Australian
community; that time is taken to ensure a quality agreement; that expectations
on the benefits of the FTA are not exaggerated; and that, once implemented,
there is a timetable for periodic review.[771]
Recommendation 14
11.49
The committee recommends that the Australian government
consult extensively with stakeholders in the negotiation phase of the FTA. It
is important that both the process and the outcomes of the FTA gain credibility
and acceptance in the wider community. To this end:
- it is
important the various stakeholders recognise that China's different systems of
law and government may produce an FTA unlike the Australia–US agreement
- there
should be a timetable for periodic review of the FTA during the implementation
phase.
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