Australia looks to FTA to open China to investment
Reuters
Australia looks to FTA to open China to investment
31 March 2009
BEIJING, March 31 (Reuters) - Access to direct investments in China has become a bigger priority for Australia as it negotiates a Free Trade Agreement, Trade Minister Simon Crean told reporters on Tuesday.
Popular sentiment in Australia has cooled towards China, its largest trading partner in goods and services, after a series of state-owned Chinese firms purchased stakes in Australian mining companies.
The biggest of those deals, Aluminum Corp. of China’s $19.5 billion purchase into Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz) (RIO.AX: Quote, Profile, Research, Stock Buzz), is still under review, while Minmetals has resubmitted its bid for miner Oz Minerals Ltd. (OZL.AX: Quote, Profile, Research, Stock Buzz) after the government blocked its initial bid on national security grounds.
"The investment issue isn’t just a one-way street from China to Australia," Crean said.
"We need to understand that the new form of trade is heavily built around investment in situ, not just transporting goods.
Australia’s biggest minerals exporters have tended to have sales offices but very limited direct investment in China, which limits foreign investment in mining to deposits that are deemed too remote or too difficult for Chinese firms to develop.
"Given the importance of investment as a significant new paradigm in the relationship between our two countries, quite apart from the case-by-case considerations, it is important to look at a new framework for investment within the FTA," Crean said.
Australia sells hundreds of millions of tonnes a year of minerals to China. It is also seeking more market access for its agricultural exports, as well as financial, legal and other services, through the free trade agreement that has already been through 13 rounds of negotiations.
Crean’s trip to Beijing, his fourth during the administration of Mandarin-speaking Prime Minister Kevin Rudd, included meetings with counterparts in the China Banking Regulatory Commission, the ministries of Commerce, Agriculture and Justice, and the powerful National Development and Reform Commission.
Rudd himself has been fighting criticisms about his pro-China stance, with Australia’s conservative Opposition Leader Malcom Turnbull accusing him of having become a "roving ambassador for the People’s Republic of China".
Two-way trade between China and Australia totalled A$58 billion ($40 billion) in 2008, rivalling Japan as Canberra’s largest exporter.
Crean assured Chinese Minister of Commerce Chen Deming that the investment review for the Chinalco deal with Rio Tinto would not be tied to the conclusion of a free trade agreement. (Reporting by Lucy Hornby; Editing by Valerie Lee)
