Xi ignites Australia's zeal for FTA deal

SYDNEY - Chinese President Xi Jinping has reinvigorated Australian enthusiasm for a free trade agreement in landmark talks last week with Australian Prime Minister Tony Abbott. With a 12 month timeline and a mountain of issues, Australian experts agree that despite the challenges, the view from the top will be well worth the climb.

Wallowing in disillusion after almost 20 rounds of roadblocks and missteps, Xi and Abbott's statements of intent for a working FTA has been applauded across industries and party lines in Australia.

Abbott was effusive in his approach to bilateral trade "as comprehensive as possible" on Monday after meeting Chinese President Xi Jinping at the APEC summit in Bali, Indonesia.

Despite domestic tremors, Abbott has signaled the way forward. While APEC itself revealed just how much China's free-trade leadership has sparked regional economic zeal.

The ducks are finally in a row for China's regional engagement through a liberalizing, multi-lateral trade network.

"The president made it clear to me how much foreign investment China hopes to make in coming years, and I want Australia to get a fair share of that foreign investment because that foreign investment will be good for jobs, it will be good for economic activity," Abbott said.

China has seemingly taken the initiative at the 21st economic leaders' meeting of the Asia-Pacific Economic Cooperation (APEC), leaving the unproven value-adding of the Trans-Pacific Partnership in its wake.

Chinese representatives have been at the heart of discussions

driving regional trade liberalization, facilitation and integration of multiple free trade agreements in Asia and the Pacific.

China described the APEC summit as a supporting structure for multilateral trade, before setting foot in Bali, fast-tracking prioritization of multiple, genuine free trade zones in the Asia- Pacific.

Australia is certainly hungry for the completion of an FTA that has made little headway over almost ten years, joining China in the effort to create the necessary conditions for a united Asia- Pacific FTA.

Bruce McLaughlin, an adviser to major Chinese investors in Australia, told Xinhua, "Negotiations have been going on for a very long time, and it seems to me that both sides' negotiating teams have been hamstrung by domestic issues."

McLaughlin noted Abbott's confirmation that investment in Australia by Chinese state-owned enterprises would be welcome "if it's in Australia's national interest, and I think that in most cases, this investment will be in our interest."

"This statement alone form Abbott at the APEC summit shows how much the situation has improved.

"When we look at the enormous benefits that both New Zealand and China have seen from their FTA, it's clear that an agreement will be great news for both Australia and China," McLaughlin said.

The Australia China Business Council (ACBC) has long supported the conclusion a wide-ranging agreement, arguing an FTA would provide an inherent value above and beyond the obvious economic benefits.

ACBC Senior National Vice President Duncan Calder told Xinhua, "As a council, we continue to support the introduction of a free trade agreement between China and Australia."

An agreement the ACBC estimates could deliver A$150 billion in value over a 20-year period to both Australia and China.

"The symbolism of friendly nations compromising and navigating sensitivities to deliver such an agreement would in itself be as powerful a message as the economic outcome."

The stuttering bilateral negotiations began in 2005 and despite 19 intense rounds of discussions (Australia was the first country to formally agree to an FTA with China), and other countries including neighboring New Zealand have already concluded pacts with the world's most important economy.

While a trade deal would almost be universally welcomed here, concerns remain over access to agriculture markets, services industries and the development of education exchanges.

Writing in the Australian Financial Review, Laurie Pearcey, director of China Strategy and Development and director of the Confucius Institute at UNSW, said that while the stakes are high for Australia's farmers, bankers, fund managers and companies looking to increase their investment footprint into China, it is the international education sector  Australia's quiet achiever that stands to gain from mutually accessible markets.

"Australia's 15 billion (Australian dollars) international education sector has been missing in action in most of the discussion around the FTA."

Pearcey warned that there needs to be a balance struck between a pragmatic recognition by both governments of the commercial issues involved in student recruitment on the one hand, and Australia's growing network of Chinese research partnerships on the other.

"The removal of barriers to recruiting students in China... would give Australia's fourth largest export earners a bigger seat at the table, and allow them to continue their growing partnerships with recruitment agents and academic partners and provide world-class degrees to feed the rise of the Chinese middle class."

Henry Makeham, founder of the grassroots bilateral youth forum, The Australia China Youth Dialogue, expresses some of the caution felt within Australia's agricultural sector.

"I would argue that Australia should not be hasty in entering into a FTA with China...whilst an FTA would be a political milestone. Would it really be a net economic benefit, especially when many key sectors, such as agriculture, may be off limits on the China side?"

McLaughlin, who has advised and identified investment opportunities throughout the Australian agricultural sector, says Chinese companies can benefit from increased access to Australia's broad-acre farming products and Australia food-safety and supply- chain management expertise, as well as Australia's low production costs.

Meanwhile Australian farmers can benefit from increased access to the Chinese market and to Chinese capital, as well as Chinese experience in large-scale production and vertical integration.

"I would hope that we could achieve something on the service sector too: Australia and China could both gain from increased trade, cooperation and investment in the legal and financial services sectors in particular, as our skills and competitive advantages in these sectors are complementary," he said.