Australia-China FTA Negotiations

Subscriber update: Ninth round of negotiations

29 June 2007

The ninth round of the Australia-China Free Trade Agreement negotiations was held from 18 to 22 June in Beijing.  Useful progress was made in some areas, but there is no sign of significant movement on market access issues in general.

Market access negotiations on goods (including agriculture) remained on hold, pending an improved offer by China.  These negotiations began at the seventh round in December, when both sides tabled their offers and requests on goods and their lists of barriers affecting a range of services.  At the seventh round, Australia stressed that China’s goods offer would need to be greatly improved before tariff negotiations could begin.  China understands that we will not move to detailed tariff negotiations until we get a greatly improved offer, but is unable to tell us precisely when it will be able to come forward with such an offer.

Talks continued at the ninth round on the full range of other issues, including the draft text of the proposed FTA. 

We made some progress in our discussions with China on rules of origin.  China indicated at the round an in-principle agreement to Australia’s longstanding proposal that we use change of tariff classification as the principal methodology for the FTA’s rules of origin.  This is a welcome development after two years of discussion on which rules of origin methodology to use in the FTA.  We hope to be able to start work later this year on rules of origin schedules for the FTA and will be seeking industry input.

Following China’s agreement at the eighth round to include a chapter on customs procedures, we had useful discussions at this round on possible provisions.  China continued to argue that the provisions should be of a “general” nature and our negotiations on the text will continue.  A chapter on customs is important for Australia given industry concerns about inconsistencies in China’s customs administration.

We also introduced draft text on import licensing for the Trade in Goods chapter.  This text is designed to improve aspects of China’s import licensing regime identified as restrictive in our consultations with Australian industries over the past two years.  We also discussed our proposed text on transitional safeguards.  These safeguards are designed to provide a breathing space for industries faced with rapidly accelerating imports from the other country as a direct result of tariff reduction under the FTA. 

Talks also continued on the draft text for a chapter to facilitate electronic commerce between Australia and China.  China is still developing its e-commerce regulatory regime and is looking at the legal aspects of our systems before working on the text in detail.

Talks continued on various Chinese non-tariff measures identified by Australian industries as barriers to trade, eg, import licensing, the mandatory quarantine testing of iron ore, retesting of some mining equipment and non-recognition of AQIS audits of Australian meat export establishments.  China will consider further our requests to abolish or amend these impediments. 

At Australia’s request, a session was held on agricultural products affected by China’s tariff rate quotas (cotton, wheat, rice, sugar, wool and corn).  We outlined production and consumption trends for these products to underline that while we could reliably supply small volumes to benefit China’s consumers and manufacturers, Australian farmers were not a threat to China’s farmers.  In other discussions we continued tonarrow down our differences on the chapters on sanitary and phytosanitary measures and, standards and technical regulations (technical barriers to trade). 

Market access negotiations on services began at the seventh round in December when both sides presented lists of barriers they face in each other’s services sectors, with proposals on how to lower them. Australia tabled further lists of barriers at the eighth round in March.  In all, Australia has tabled 133 barriers affecting access for Australian services suppliers to China.  At the eighth round we also tabled a number of barriers facing Australian investment, mainly in the mining sector.  At the ninth round, we spent a good deal of time on each of the services barriers tabled, in Australia’s case, barriers affecting financial services, telecommunications, education, construction, engineering, architecture and urban planning, transport and logistics, legal services, accountancy, mining and environmental, tourism and sporting services.  We also spent two days discussing investment issues raised by both sides prior to the round.  It was evident at the ninth round that a big gap remains between the expectations of Australia and China on both services and investment.  China has considerable sensitivities in these areas and progress continues to be slow.  

On intellectual property, Australia tabled additional draft text covering two issues which have been raised by Australian Industry: the establishment of a possible bilateral consultative mechanism on IP issues and the protection of confidential information provided by enterprises when applying for tenders or regulatory approval.  Australia also tabled a consolidated draft text which combines Australia’s and China’s draft IP chapters, in an effort to identify areas of convergence and provide increased focus on provisions requiring detailed negotiations at future meetings.

China used a significant part of the meeting to reiterate its strong concerns regarding the scope and content of Australia’s draft IP chapter.  We responded firmly, providing sound policy and commercial reasons for the provisions included in our draft chapter.  While there are signs of convergence on a few of the draft provisions, the IP negotiations remain characterised by two strongly divergent competing visions for what constitutes an appropriate IP chapter.

Our active program of advocacy in China, aimed at convincing key decision makers that China has little to fear from a high-quality FTA with Australia, is continuing.  In the past year we have held high-level sectoral seminars on sugar, wool, accountancy, insurance, legal services and competition policy, as well as capacity-building courses for Chinese officials on FTA issues. We have also held a major agriculture conference in Xian and led Australian industry visits to China.  We plan to hold further seminars in China this year, including on grains, telecommunications and dairy.  Chinese experts on sugar, education and intellectual property have also been invited to visit Australia in the next few months as part of our advocacy program.

The tenth negotiating round is tentatively scheduled for late October in Canberra.

For more information, contact the China FTA Taskforce:

Email:  chinafta@dfat.gov.au

Fax (+612) 6112 2468