Australia-China FTA Negotiations

Second round of negotiations

1 September 2005

A second negotiating meeting on the Australia-China Free Trade Agreement (FTA) was held in Beijing from 22-24 August.  This was the first substantive meeting between officials on the FTA negotiations (the first meeting, held in Sydney in May, covered procedural issues).

The Australian delegation was made up of officials from the departments of: Foreign Affairs and Trade; Agriculture, Fisheries and Forestry; Industry, Tourism and Resources; Treasury; Education, Science and Training; Communications, Information Technology and the Arts; Finance and Administration; Attorney-General's; as well as from the Australian Customs Service, and IP Australia.

The Chinese side, led by their Ministry of Commerce, had available a large number of officials from a wide range of agencies, including the Ministries of Finance, Agriculture, Communications, Information Industry, Education, Justice, Construction, as well as from the National Development and Reform Commission, General Administration of Customs, the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), China Banking and Regulatory Commission, China Securities Regulatory Commission, China Insurance Regulatory Commission, General Administration of Civil Aviation, State Environment Protection Administration, and China National Tourism Administration.

The meeting began a wide-ranging and comprehensive exchange of information about each other's trade and investment regimes.  Each side put a range of detailed questions to the other.  Both sides agreed that all issues could be discussed, without prejudice to the position that either might take in the negotiating phase.  At this stage, the focus is on information exchange; there was no discussion of commitments which might be entered into in the Agreement.

China's questions included areas that it identified as being of particular interest to it (including quarantine, foreign direct investment, movement of natural persons, and anti-dumping).

Australia, as well as asking questions, emphasised the need for relevant and up-to-date information about China's policies and administrative regimes in all sectors. 

The substantive discussions took place within four working groups covering agriculture and quarantine; trade in goods; trade in services; investment and trade facilitation issues.

The Agriculture Working Group focused on each country's respective agriculture and trade policies, sanitary and phytosanitary regimes, as well as covering technical barriers to trade.

Both the Chinese and Australian officials underscored that agriculture is an important sector to each country but that each is looking for a positive, liberalising, win-win outcome from these negotiations.  Each side asked detailed questions of the other, and in some cases, further information has been sought.  We naturally took the opportunity to canvass the wide range of concerns that Australian agricultural exporters have so far raised with us.

The Trade in Goods Working Group focused on tariffs, non-tariff barriers, industry assistance, customs administration, rules of origin, trade remedies and government procurement.

We used the session on non-tariff barriers and industry assistance to raise issues of concern to the Australian business community, in particular in relation to the kinds of government assistance and subsidies provided to domestic Chinese industries.  We explored in detail how each other's trade remedies regime worked.  We had a useful exchange on customs facilitation, building on the cooperation that already exists between our two customs organisations.  Chinese officials were interested in Australia's approach to rules of origin, particularly the use of an approach based on change of tariff classification.  We explained in detail to the Chinese side how government procurement works in Australia, and how we have handled government procurement in our other FTAs.

The Trade in Services Working Group included representation from a wide range of agencies from both countries.  This allowed in-depth discussion of a range of sectors, including education, tourism, telecommunications, financial, transport, professional and mining services, as well as the regulations affecting the temporary entry of people.  Again, both countries used the opportunity to raise questions about each other's regimes in areas of interest to them.  The information exchange allowed us to clarify a range of issues raised with us by industry including repatriation of profits, project approval and licensing requirements, corporate law and foreign investment regulation, high capitalisation requirements, business scope restrictions, transparency, accreditation and recognition of qualifications, lengthy approval processes and national treatment issues.  Australia also asked a number of sector-specific questions directed towards developing a clearer picture of regulatory and other market access barriers facing Australian service providers.  Since the Chinese experience is particularly focused on its WTO accession commitments, the Australian side explained how services are treated in FTAs, and how this can differ from the form in which services are handled in the World Trade Organization agreements.

Both countries sought information about our respective foreign investment regimes and expressed an interest in facilitating investment in each.

The fourth Working Group covered a set of issues including intellectual property rights, competition policy, transparency and dispute settlement.  Both countries asked detailed questions about each other's regulatory and enforcement regimes.  On intellectual property, the Chinese side was well prepared.  We had a robust exchange not only on technical issues but also on broader issues, especially enforcement and concerns raised by Australian industry.  Importantly, China revealed that it is undertaking several reviews of its intellectual property laws, and accepted the Australian offer to provide detailed materials for consideration in the reform of China's intellectual property regime.  We used the session on transparency to raise issues of concern to the Australian business community, focusing at this stage on the availability and publication of Chinese laws and regulations and ongoing efforts by the Chinese government to improve transparency in administrative decision making.  Chinese officials also expressed interest in finding out more about Australian federal and state governments’ approaches in these areas. 

There was a general discussion about the structure of the negotiations and the agreement.  This laid the basis for continuing discussion of these issues at the next negotiating meeting.  Both sides agreed that further information was required in a range of areas.  Some of this will be provided inter-sessionally and discussed in more detail at the next meeting.

It was tentatively agreed that the next negotiating meeting will take place in the week beginning 31 October in Beijing.

More information on Australia's existing FTAs.