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Expert dampens China FTA hopes

The Australian, Canberra

Expert dampens China FTA hopes

Catherine Armitage, China correspondent

22 June 2005

AUSTRALIANS should not expect too much from a China-Australia free trade agreement, the Howard Government’s lead negotiator for the deal warned yesterday.

The federal Government says an FTA with China could deliver a $24 billion boost to the economy by opening up two-way trade with China, already the nation’s biggest export market and second-biggest source of imports.

But lead negotiator Rick Wells, who is in China on a four-city tour to discuss Australian business needs from a free trade deal, warned it would be a "big ask" of China to seek the economy-wide changes needed to improve commercial conditions for Australian businesses operating there.

Even if a bilateral deal did win preferential access for Australian products to Chinese markets, this might only be temporary, because other countries were likely to win the same treatment once multilateral trade rounds were concluded, Mr Wells warned.

For some products "we could end up with preferential access to the Chinese market that might only last three or four years". But even that would be worthwhile for companies seeking to get established or consolidate in China, Mr Wells said.

The issues were "very complex and difficult" and "just about every aspect of Australian business, trade and investment (in China) is involved", Mr Wells said.

In many sectors, the regulatory and "behind the border" issues, which acted as road blocks to doing business in China, had become even more opaque and complex since China joined the WTO in December 2001, Mr Wells said, because of China’s size and the speed of change.

A developing legal system, lack of capacity and the relationship between provincial and national governments made the Chinese economy "extremely difficult to follow", he said.

Chinese implementation of its WTO accession agreement — which he helped negotiate — had been "disappointing" in some sectors and "extremely disappointing" in enforcement of intellectual property rights, Mr Wells said. Australia would need to be "extremely vigilant" in enforcing a deal. He would expect any deal to incorporate a body to oversee implementation.

After a preliminary round last month to discuss talk logistics, the first substantial round of negotiations was expected some time in the second half of the year, Mr Wells said.

Trade Minister Mark Vaile said last month he hoped the next round would be completed earlier, by the time he visits China in early July.

But a spokesman for Mr Vaile emphatically denied that talks had been delayed by the embarrassing attempted defection of diplomat Chen Yonglin in Sydney two weeks ago. The spokesman said it was just a matter of co-ordinating the complex schedules of the participants.

Mr Wells said he did not expect sensitivities in the overall relationship between the two countries to intrude on the talks because China took a firm line on excluding non-trade issues from trade talks.