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China fears FTA’s impact on farming

ABC, Australia

China fears FTA’s impact on farming

22 March 2005

By China correspondent John Taylor

As the prospect of Australia and China negotiating a free trade agreement (FTA) appears increasingly likely, China has flagged that Australian farmers may not get all they wish for.

A two-day symposium between government officials and representatives of various industries from both countries is under way in Beijing.

China’s Vice Minister of Commerce, Ma Xiuhong, told delegates that signs for the FTA are positive.

"The result of the joint feasibility study shows China and Australia can help each other in the economic and trade fields," she said.

"If, in future, we can establish this China-Australia free trade agreement, both sides will benefit and it will further our future cooperation."

But China has expressed concerns about the effect of any FTA on its agriculture sector.

Pan Wenbo from the grains section of the Chinese Ministry of Agriculture, is already worried that China is losing out to Australia.

"As far as I can understand, on the Chinese people’s dinning table, three out of 10 cakes or biscuits are made with high-quality white wheat from Australia; four out of 10 cups of beer were brewed from Australian beer barley," he said.

"But our country’s corn and rice can be barely seen in Australia."

Social unrest

China says agricultural exports to Australia last year totalled $US244 million, whereas imports from Australia were about $US2.4 billion.

Australian farmers hope an FTA will open up Chinese markets even further.

Ms Ma is flagging that any negotiations over agriculture will be tough, for economic and political reasons.

"China has 740 million peasants, with poor agricultural base," she said. "If we don’t handle it properly, it might cause trouble or social unrest."

She added: "If we start the talks for an FTA, I personally believe, during the course of negotiations, we should be aware of the sensitivity of China’s agriculture sector and do special studies on the agricultural trade and consider the issue flexibly."

Geoff Raby from the Australian Department of Foreign Affairs and Trade told the Chinese audience it had little to fear.

"Australia’s total production is only a small fraction of China’s own production and consumption," Mr Raby said.

"Furthermore Australia’s ability to expand production is constrained by available arable land and water resources."

No illusions

Dr Raby says Australia has no illusions about the size of challenges involved in negotiating an FTA with China, not least fears that Australia’s manufacturing sector would be left exposed.

Australia is yet to sign off on talks for an FTA but Dr Raby says the benefits are clear.

"A comprehensive free trade agreement between Australia and China would firstly boost the net welfare of both countries and secondly that the greater the liberalisation between us the greater the benefits," he said.

Professor Zhang Yunling from the Chinese Academy of Social Sciences supports an FTA, believing Australia and China are natural partners.

He says there are more than economic benefits.

"The FTA talks between China and Australia have a special function," he said. "As a developing country and as an advanced country we can find a pattern or method to get closer in regards to the political system, the legal system and other areas.

"During this process, it will help China’s economic reform."

The two countries are expected to decide and announce next month whether they will work towards a free trade agreement.