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Australian cabinet split over free trade negotiations with China

AFP | Monday August 7, 2006

Australian cabinet split over free trade negotiations with China

SYDNEY (AFP) — Free trade negotiations between China and Australia are sensitive for both countries, Foreign Minister Alexander Downer said amid reports the cabinet is split over whether to abandon tariffs protecting Australia’s clothing and motor vehicle industries.

Downer said discussions with Beijing were at an early stage and it was "going to be difficult for both sides."

"For the Chinese there is a lot of sensitivity over opening up agricultural markets and the big gains for Australia are going to be to some extent in agriculture," he told Sky Television.

He acknowledged the textile, clothing and footwear and motor vehicle industries, which have "relatively high levels of protection," were sensitive for Australia.

But he declined to comment on a report in The Australian newspaper that Prime Minister John Howard’s cabinet was divided over the scope of a deal with China.

Industry Minister Ian Macfarlane and Finance Minister Nick Minchin are reportedly nervous about abandoning tariffs that protect the automotive and clothing industries from cheap Chinese imports.

Trade Minister Mark Vaile, meanwhile, has asked for all industry sectors to be part of the next round of negotiations with China, the newspaper said.

Australia maintains heavy protection for the motor vehicle and clothing sectors, although tariff rates are set to fall from 2010.

Opposition leader Kim Beazley urged slow and careful progress towards a deal, saying it should not jeopardise Australian manufacturing.

"We have a good relationship with China and an excellent trading relationship, and an FTA would not necessarily add that much to it," he told Australian Broadcasting Corporation radio.

China is now Australia’s second largest trading partner after Japan.

Australian exports to China soared 46 percent to 16 billion Australian dollars (12 billion US) in 2005 while imports rose 19 percent to 21 billion Australian dollars.

If the free trade agreement goes ahead, it would be China’s first FTA with a developed economy.

 source: AFP