China, Australia near FTA Talks

China and Australia may be one step nearer to launching talks on building a free trade area (FTA) between the two countries, as a feasibility study to be released this month strongly proposes the FTA.

"China and Australia are highly complementary in economy and trade, and an FTA between the two sides would benefit both countries and largely promote a bilateral cooperative relationship to mutual prosperity," Ma Xiuhong, China's vice-minister of commerce, cited the report as saying.

Ma told approximately 120 officials, scholars and business people from both countries that the feasibility study has gone smoothly over the past 15 months and is now at its "final stage."

Chinese and Australian experts have been working on the study since the two countries signed the Trade and Economic Framework in October 2003 during Chinese President Hu Jintao's visit to Australia.

Australia is the largest developed country trying to reach a FTA deal with China, which has been trying to establish FTAs with the 10-member Association of Southeast Asian Nations (ASEAN), the six-member Gulf Cooperation Council and the five-member South African Customs Union, Chile and New Zealand.

A specific timetable the FTA has not been announced. But analysts said April could be a possible moment for the announcement when Australian Prime Minister John Howard visits China for the Bo'ao Forum.

Geoff Raby, deputy secretary of the Department of Foreign Affairs and Trade of Australia, told the symposium that following the completion of the feasibility study, the two governments will decide "whether or not to take the historical step of launching the FTA negotiations.

"Both governments will give careful consideration of the results, and carefully weigh all elements to reach the decision," he said.

Australia will have to decide whether to treat China as a market economy. If both sides agree to negotiate an FTA, Australia will be the first major developed country to do so.

China is now Australia's third largest trading partner, second largest export market and second largest origin of imports.

Trade between China and Australia has been growing quite fast over the past few years. Chinese figures show that two-way trade reached 20.39 billion US dollars in 2004, up 50.3 percent from a year ago, double the figure of 2002 and more than 230 times the figure when the two countries established diplomatic relations in December 1972.

Service trade between the two countries has also experienced big growth. The service trade volume in education hit 250 million US dollars in 2003. About 60,000 Chinese students are studying in Australia.

As the negotiations approach, China has proposed that special attention be given to its agriculture and service trade in the negotiations.

Ma Xiuhong said at the symposium that a China-Australia FTA would exert a "relatively big pressure" on China's agriculture and service sectors.

She said China's agriculture and service sector are quite vulnerable as they are less developed than Australia's.

Earlier this year, Australian Trade Minister Mark Vaile said he is confident that Australia can secure a free trade deal with China by the end of 2007.

"If we launch one when the prime minister meets President Hu Jintao, I think that there's a very strong possibility that we can complete it before the end of 2007," said Vaile.