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Australia should press ahead with China FTA : Trade Minister Vaile

AFP, 13 April 2005

Australia should press ahead with China FTA : Trade Minister Vaile

SYDNEY : Australia should push ahead with negotiations for a Free Trade Agreement (FTA) with China despite the risks and difficulties involved in engaging with the Communist nation, Trade Minister Mark Vaile said.

A feasibility study on whether to commence trade talks with China is before the cabinet and Prime Minister John Howard is expected to make clear Australia’s position on FTA discussions during a visit to Beijing next week.

"I believe the time is right for Australia to move into free trade negotiations with China," Vaile told the National Press Club in Canberra.

"Australia must be at the front of the queue in this market. The Chinese economy grows stronger by the day and Australia simply cannot afford to be left behind."

If Australia were to enter free trade talks with China it would be required to grant the Asian powerhouse market economy status, a key issue for Beijing.

Vaile acknowledged that there were some who "believe that the challenge is just too hard.

"I frankly believe that fortune favours the brave. We need to be brave in this regard," he said.

A potential obstacle has already emerged in the high price of Australian iron ore although Vaile said the outcome of discussions on this matter would not affect free trade negotiations.

China is Australia’s largest market for iron ore but it is pushing for lower prices as it tries to meet ballooning demand for resources for steel production.

Vaile said the Australian product cost less than that from other countries, adding that he had been petitioned by the Indian government to raise the price — India being another major iron ore supplier.

He stressed that the government would never intervene to alter the price.

"Governments don’t intervene in these markets in terms of the establishment of price as a result of supply and demand forces," he said.

"The reality is that China is reaching out and engaging and trying to integrate itself with the global economy, and that’s a market, that’s the marketplace.

"I made the point that China aspires to be recognised as a market economy — well, hello, this is how a market works," he added.

Vaile also said that Australia could take action in the World Trade Organisation if China’s efforts to force down iron ore prices, which include attempts to restrict the number of importers to about 100, contravene world trade rules.

In 2004, Australia’s exports to China grew to 12 billion Australian dollars (9.3 billion US), with resources accounting for about 60 percent.

Australia’s exports of good and services globally reached 152.5 billion dollars in 2004.

Outlining the government’s trade agenda for 2005, Vaile said Australia would not rule out forging further trade ties with other countries particularly in Asia and hinted that Indonesia could be a future FTA partner.

"I am sure we will move in that direction but the timing needs to be right and the circumstances need to be right," he said.

Last week Australia agreed to negotiate a free trade deal with Malaysia while it already has FTAs with Thailand, Singapore, the United States and New Zealand.

Australia will begin free trade talks with the United Arab Emirates and is negotiating alongside New Zealand on an FTA with the 10-member Association of Southeast Asian Nations (ASEAN).

 source: Channel News Asia