Call for miners' input into Australia-China FTA study

MINERS will be formally asked for submissions for a feasibility study into a free trade agreement between Australia and its third-largest trading partner China, according to Department of Foreign Affairs and Trade deputy secretary Geoff Raby.
Call for miners' input into Australia-China FTA study Call for miners' input into Australia-China FTA study Call for miners' input into Australia-China FTA study Call for miners' input into Australia-China FTA study Call for miners' input into Australia-China FTA study


Sarah Belfield

"We're certainly talking to the mining and energy industries and asking them to think hard about what sort of things they might want to see in an FTA to advance their interests," Raby told after a presentation in Perth.

The feasibility study is scheduled to run until October 2005, but Raby said the study may not take that long. "We've had a couple of senior-official level meetings and a couple of working-group level meetings and we already have now an agreed list of chapters … and that's because the atmosphere is very positive," he said.

But Raby also cautioned that merely reaching the feasibility stage was a hard-won step. "It wasn't easily achieved, and that's just the study part. So who knows how difficult the negotiations will prove to be."

He said China was at first not interested in an FTA with Australia. "We had, over 18 months ago, flagged the possibility that we would like to talk at some stage … about whether it would be possible to do an FTA, and we had the door slammed firmly in our face."

"We were told, 'Don't come and bother us, we've just joined the WTO, we've got all these obligations to digest … we've got other interests closer to home … why should we be interested in Australia? The relationship is fine, why do we need anything more in the relationship?'"

However Raby said that early last year a major shift occurred in the way China approached strategic trade policy.

He said that when Australia spotted this shift and approached China again about a possible FTA, a key argument involved the mining industry in Australia.

"With the tremendous growth in China now and the huge demand for raw materials and energy, there is ever-increasing interest in China about how to ensure its supply … over long periods of time," he said.

He said another important factor in successfully persuading the Chinese was the then advanced state of FTA negotiations with the United States.

"We've found [the US FTA] to be a tremendous asset, it's really given us weight in the region. It also shifts strategic settings and China is very much attuned to these sorts of shifts in strategic alliances," Raby said.

"They are often quite cautious in the initial steps – that's a perfectly understandable, rational and acceptable response."

The clincher for the feasibility stage was related to how China's economy is seen by the WTO.

"China is very unhappy with some elements of its accession to the WTO. Its protocol of accession has two articles which basically has China accepting that it will be treated for the purposes of anti-dumping … as if it were an economy in transition for 15 years."

Raby said that Australia has agreed to unilaterally suspend the application of those two articles during the feasibility study and would recognise China as a market economy at the start of any negotiations for a free trade agreement.

He said that in doing this Australia has not given up any anti-dumping rights.

Raby said the feasibility study meant undertaking a consultative process involving Australian interests in China, the states and territories of Australia, Commonwealth agencies, and the Australia-China Business Council who hosted last night's presentation.

He said Australia will also be looking to identify champions of a bilateral FTA among Chinese enterprises.

Exports of iron ore to China increased by 22% in 2002-03 and Australia's total exports to China were worth $8.8 billion that financial year, according to Australian information compiled by DFAT's market information and analysis section.

China ranks third as an import source of goods and services to Australia, and fifth as an export market.