Australia, China Ink Major Free Trade Agreement
Los Angeles, CA – Australia and China, it largest trading partner, have inked a preliminary free-trade deal that would give Australia’s service industry unsurpassed access to the Chinese market and hand the Australian agriculture sector some significant market advantages over its U.S., Canadian and European competitors.
Under the terms of the “Declaration of Intent” deal, China will reportedly make 85 percent of Australian goods imports tariff-free from the outset, rising to 93 percent four years later, the Australian government said.
In return, Australia will lift tariffs on imports of Chinese manufactured goods and alter the threshold at which privately-owned Chinese companies can invest in non-sensitive areas without government scrutiny from 248 million Australian dollars ($218 million) to AU$1,078 million.
The pact would be signed soon after the first of the year and could take effect as early as March if it is endorsed by the Australian Parliament. No modeling has been done on the value of the free-trade deal, the government said.
The removal of tariffs on Australian farm products would give Australia an advantage over U.S., Canadian and E.U. competitors while negating advantages New Zealand and Chile have enjoyed through their free-trade deals with China, the government said.
According to press reports, stumbling blocks in the negotiations, which began in 2005, were Chinese protection of its rice, cotton, wheat, sugar and oil seed industries and demands for less Australian government restrictions on Australian companies and assets being sold to Chinese state-owned businesses.
Those specific areas were excluded from the agreement, which will be renegotiated in three years, reports said.
Two-way trade between Australia and China grew from $86 million in the early 1970s to $136 billion in 2013.