Agreements pave way for China-Australia FTA
By Hu Xiao (China Daily)
Updated: 2005-04-19 06:43

China and Australia yesterday signed a Memorandum of Understanding (MOU) to formally start negotiation on a free trade area (FTA) following Australia's recognition of China's full market economy status.

It was signed by Minister of Commerce Bo Xilai and Australian Ambassador to China Alan Thomas after talks between Premier Wen Jiabao and his Australian counterpart John Howard at the Great Hall of the People in Beijing.

China's President Hu Jintao (R) talks with visiting Australia's Prime Minister John Howard during a meeting at the Great Hall of the People in Beijing April 18, 2005. [Reuters]

This makes Australia the second developed country in Oceania, after New Zealand, to grant full market economy status and open free trade negotiations with China.

"The MOU is of great significance politically as well as economically," said Shen Shishun, an Australia studies expert at the China Institute of International Studies.

Australia is now the largest developed country seeking to reach a free trade agreement with China, which has been trying to establish deals with the 10-member Association of Southeast Asian Nations (ASEAN), the six-member Gulf Co-operation Council and the five-member South African Customs Union, Chile, Pakistan and New Zealand.

Shen said Australia's formal recognition of China's full market economy status will help China win equal treatment worldwide, a designation that eases the burden on China in confronting anti-dumping actions in export markets.

"The agreement will also help Australia to further enlarge its influence in Asia," said Shen.

During yesterday's talks with Howard, both President Hu Jintao and Premier Wen expressed hopes that both sides can pursue the establishment of free trade under the guidelines of mutual sympathy, mutual understanding, flexibility, pragmatism, and mutual benefit.

Wen also stressed that China welcomed Australia to play an active role in East Asia.

Describing the signing of the MOU as a milestone in bilateral ties, Howard vowed that Australia will actively participate in free trade negotiations with China.

A study by both countries shows that Australia will benefit by more than US$15 billion over the next 10 years from such a deal, the Australian Associated Press reported.

"The two economies are very much complementary and this (free trade) will certainly raise their competitiveness," said Shen.

There may be some difficulties, he added, but the two sides should adopt long-term strategies towards their mutual aim.

Australian mining concern BHP Billiton recently imposed a 71.5 per cent price rise on its iron ore exports, arousing concern from the mainland, Australia's biggest iron ore importer.

He Yafei, director of the Department for North America and Oceania at the Foreign Ministry, told Australian media before Howard's visit that while the increase was a commercial matter, Canberra "can certainly encourage companies to take a long-term point of view in setting prices... don't just look at the benefits under their noses."

China is now Australia's third largest trading partner, second largest export market and second largest origin of imports.

Chinese figures show that two-way trade reached US$20.39 billion in 2004, up 50.3 per cent from the year before and double the 2002 figure.

Howard will leave today for Japan before traveling to the southern Chinese island of Hainan later this week for the Boao Forum for Asia where he is expected to make a keynote address.

(China Daily 04/19/2005 page2)

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