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At your service: Chinese FTA win

The Australian, Canberra

At your service: Chinese FTA win

Rowan Callick, China correspondent

25 April 2006

AUSTRALIA’S service providers - including the big banks, universities and construction and transport companies - yesterday received the strongest indication yet that they may be among the winners from the free trade agreement being negotiated with China.

So far, China’s bilateral FTAs with the Association of South-East Asian Nations have excluded services and investment.

But Australian service sector leaders had cause for optimism after attending a conference at Beijing’s State Guest House, a month out from the next crucial round of talks, when Canberra will put its first draft on the table.

Vice-Minister of Commerce Wei Jianguo stressed the size and competitiveness of Australia’s service industries and said a "win-win" result was possible.

Australian Education Minister Julie Bishop said: "I cannot imagine how the negotiations can be concluded without a good outcome on services" - which comprise 70 per cent of the Australian economy and employ four in five workers.

The meeting yesterday provided an opportunity for Australian industry to demonstrate its capacity to talk to a broad range of Chinese officials, beyond the FTA negotiating team, from the key agencies that will have to consider making concessions on the services front.

Services trade between the two countries was worth $2.3 billion last year, with the balance in Australia’s favour - unlike the trade in goods, in which China has a surplus.

"The countries are complementary in services," Mr Wei said.

He said the FTA "would require both sides to further open up their markets on the basis of World Trade Organisation commitments, and cut back on the barriers on a reciprocal basis."

Canberra wants the deal to go beyond WTO commitments.

Mr Wei said the negotiations would provide China with an opportunity "to learn close up from the advanced technology and management skills in Australia, contributing to the development of the sector in China, and to its own competitiveness". He anticipated a growing role for China’s construction industry in the Australian market, and for its shipping and air freight businesses.

Ms Bishop welcomed Mr Wei’s position: "We have made it clear that it’s all or nothing. And the Chinese are most certainly engaged."

She said education was now Australia’s fourth-largest export, worth $7.5 billion. The Chinese market dominated, with 81,000 students having enrolled for courses in Australia this year. Issues at stake in the FTA talks included the recognition of both university and vocational qualifications and programs for delivery inside China, she said.

Yesterday Ms Bishop and Chinese Science Minister Xu Guanhua, who visited Australia earlier this month, signed an agreement for each country to contribute $2 million to a scheme for the exchange of research scientists.

Ms Bishop said that Australia’s winning eight Nobel prizes for science had played an important role in convincing China - which has yet to win one - of Australia’s capacity "to punch above its weight" as a services partner. One of the latest winners, Professor Barry Marshall, was mobbed when he visited Chinese campuses last month.

After four rounds of FTA talks, mostly just exchanging information, the next round in Beijing from May 22 will see Australia place some of its cards on the table, in the form of a template of the ultimate document. This will not have all the numerical targets, especially in sensitive areas for the Chinese, including investment and government procurement. The round after that, in August, will start to address market access for goods, including tariff reductions for agriculture, with each country listing what it is prepared to concede, and what advances it is seeking from the other side.