AFP | 01 November 2004
Australia optimistic about free trade pact with China
SYDNEY : Australia is increasingly optimistic about securing a free trade deal with China, which it believes could be even more important than the recently signed pact with the United States.
With Prime Minister John Howard’s government moving for closer economic engagement with Asia as part of its fourth term agenda, it is forecasting for the first time a successful outcome to negotiations for a free trade agreement (FTA) with Beijing.
A spokesman for Trade Minister Mark Vaile told AFP that the minister was confident that an FTA would be achieved with China, without elaborating.
Vaile told The Australian newspaper in an interview confirmed by his spokesman: "We can’t afford not to enhance our relationship with China at this point in our history."
"It would open up new markets and give us a prominent position in a market growing at about 10 percent a year."
Vaile said negotiating an FTA with China would be "arguably more important" than the Australia-US free trade deal recently concluded and due to come into operation on January 1.
China is already Australia’s third largest trading partner, after the United States and Japan, and it is rising fast with bilateral trade almost tripling by last year to 14.7 billion since Howard’s government won office in 1996.
With a booming economy, China is an increasingly important consumer of Australia’s natural resources, including gas and minerals.
Vaile has said he believes an FTA would bring huge new opportunities for Australia to resource China’s continuing industrialisation after it finalised last year a 25 billion dollar (18.6 billion US) contract to supply China with Liquified Natural Gas.
Given the size of China’s economy, the speed of its growth and its relative geographical proximity compared to the United States make it potentially a much bigger trading partner.
Australia has also formalised a free trade deal with Singapore and is close to finalising another with Thailand. Malaysia, under its new Prime Minister Abdullah Ahmad Badawi has also agreed to look at the benefits of an FTA with Australia.
Australia and New Zealand will also begin talks on a free trade deal with the 10-member Association of Southeast Asian Nations (ASEAN), which Vaile is confident will be concluded by 2007.
Howard and New Zealand Prime Minister Helen Clark have been invited to attend the annual ASEAN conference in the Laotian capital of Vientiane later this month to discuss a trade deal between ASEAN on one side and the Australia-New Zealand partnership on the other.
Talks on a possible free trade pact with China started late last year after Chinese President Hu Jintao made a historic address to the national parliament in Canberra and officials of the two countries have agreed to a preliminary study scheduled for completion by next March.
During his visit, Hu and Howard signed a preliminary agreement for a 25-year contract to supply 30 billion dollars’ worth of LNG from Australia’s Gorgon gas project off Western Australia’s environmentally sensitive Barrow Island.
The supply deal, which with final regulatory approval from Australian authorities would begin in 2008, followed the finalisation of 25 billion dollar contract to supply LNG from Australia’s North West Shelf to China’s gas-hungry Guangdong province.