FTA with China may take five years

The Age, Melbourne

FTA with China may take five years

7 March 2005

A free trade deal with China may take up to five years to negotiate but it will cover contentious areas including cuts to Australia’s textile and clothing tariffs.

Ahead of a trip to China to discuss progress on the feasibility study into the proposed free trade agreement (FTA), Trade Minister Mark Vaile said there had been no formal agreement by Australia to go ahead with the negotiations.

And on the contentious issue of Australia’s recognition of China as a market economy, Mr Vaile said by the terms of FTAs, if the two countries begin negotiations then China will be recognised as a market economy.

Work on the feasibility study has been brought forward, with the report expected to be finished by the end of the month.

Prime Minister John Howard is expected to start formal negotiations when he visits China in April.

But Mr Vaile said although preliminary work on the feasibility study was positive, Australia would not simply agree to negotiations without there being a strong case for the deal.

"There’s no final decision been taken yet. There are still some issues that we need to discuss in terms of the structure of what a negotiation might look like, and how we approach that, time frames, there are a number of issues that are yet to be resolved," he told reporters.

"At the end of the day, as was the case with America, we’ve got to take a decision based on what we think is in the national interest."

Mr Vaile said because of some of the technical difficulties involved in the FTA, it was likely to take much longer than the deal negotiated with the US.

The American FTA took little more than 12 months.

Mr Vaile said the China deal could take up to five years.

"We need to be able to get better access for not just agriculture, not just manufactured goods but also services and investment, and the Chinese economy and structure of governance is different to most other countries in the world, and that in itself will present some challenges," he said.

Already there have been concerns in Australia what an FTA with China might mean for some sectors, particularly the manufacturing, textile, clothing and footwear areas.

Mr Vaile said no area could be excluded from the negotiating process.

"You can’t arrive on day one and have any a priori exclusions, exclude an entire sector from negotiation," he said.

"What those negotiations produce is a totally different matter. That’s just a matter of finding the right balance within sectors across sectors between the two countries."

Opposition trade spokesman Simon Crean said conceding market economy status, which affects the ability of companies to complain about product dumping, would surrender an important negotiating position.

He said Australia should also learn from its negotiations with the US and not give up substantial issues, such as most favoured nation status in agriculture.

"Labor stands ready to take a positive approach toward Australia-China FTA negotiations, if they begin," he said.

© 2005 AAP

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