Australia-China FTA Negotiations

Subscriber update: Tenth round of negotiations

1 November 2007

The tenth round of the Australia-China FTA negotiations was held in Canberra on 22-26 October. While we narrowed our differences on some issues and made useful changes to the proposed text of the agreement, overall progress in the negotiations continued to be slow.

Market access negotiations on goods (including agriculture) remain on hold pending an improved offer by China. We exchanged initial requests and offers on goods last December but China has not been able to respond to our request for a better offer. 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 that will be.

Following on from the ninth round, a session was held on agricultural products affected by tariff rate quotas (cotton, wheat, rice, sugar, wool and corn). The focus was on wool and sugar with brief discussion of rice and corn (wheat and cotton were discussed at the ninth round). Australia emphasised that our producers would not be a threat to China’s farmers. We have proposed joint studies of future demand and production of the commodities of interest to Australia and China is considering our proposal.

We continued our requests to China on a range of non-tariff measures identified by Australian producers as trade impediments. These include restrictions on the sale of kangaroo meat, mandatory retesting of wool, approval of Australian meat export establishments, issues pertaining to quarantine import permits, licensing of some Australian imports, quarantine testing of iron ore and the recognition of reports by Australian laboratories on compliance with Australian standards. We will provide more information to allow China to consider our requests further.

Discussion continued of the various chapters covering trade in goods and agriculture and we narrowed our differences on trade in goods, rules of origin, customs procedures, technical barriers to trade and sanitary and phytosanitary issues. In particular, encouraging talks were held on rules of origin. At the previous round, China indicated its in-principle agreement to our proposal to use change of tariff classification as the principal methodology in the FTA for determining the origin of goods. At the tenth round, China made a commitment to begin detailed work on the origin schedules at the eleventh round next year. We will consult interested parties in advance of these negotiations.

During our talks on the trade in goods chapter, we raised our concerns over aspects of China’s import licensing regime including our industries’ concerns about China’s automatic licensing system, particularly in relation to iron ore.

Talks also continued on the draft text for e-commerce chapters. China is cautious about some aspects of our proposed text, given that the country’s e-commerce regulatory regime is still under development.

Government procurement remains a sensitive subject for China. China gives preference to domestic suppliers but will be required to open its procurement market to other members of the WTO Government Procurement Agreement (GPA) after it joins next year. As Australia is not a member of the GPA, we want to ensure that our suppliers and products receive treatment at least as favorable as that given by China to GPA members.

At China’s request, talks on intellectual property were put on hold until the next round.

Outcomes on services were limited to agreement to consider a single consolidated text on cross border trade in services, agreement to explore mutual recognition agreements in engineering, architecture and construction and useful clarification of regulatory arrangements and barriers in some sectors.

We continued to discuss Australia’s proposals on a framework for commercial association between Chinese and Australian law firms and we proposed a scoping study on recognition of qualifications in vocational education and training and in higher education.

Progress on transport and logistics services remained slow but useful talks were held on air transport services and we clarified some regulatory issues and developed the text and definitions relating to air transport services. Useful talks were also held on regulatory issues in the telecommunications, tourism and traditional Chinese medicine industries.

The negotiations on investment focused on mining investment issues such as the unpredictable approval process for exploration and mining licences, the treatment of overlaps between minerals in the prohibited and permitted category and the highly prescriptive regulation of geological explorer qualifications. China undertook to consider our proposal to reduce the risks in moving from the exploration to the mining stage by giving more certainty to Australian holders of exploration licences that overlap with a mineral in the prohibited category. China also undertook to consider ways to deal with problems caused by overlaps with holders of petroleum tenements.

As part of our program of advocacy, a group of Chinese financial services journalists visited Australia from 11 to 19 August; this resulted in good press coverage in China of how China could profit from Australia’s advanced financial services sector. We arranged for officials from the Ministry of Labour and Social Security to visit from 26 August to 2 September and explained how the FTA could help China use Australia’s expertise in vocational education and training. We organised a seminar in Beijing on telecommunications (the eleventh sectoral seminar so far) on 19 September at which Australian officials and industry figures explained to their Chinese counterparts how the Chinese telecommunications sector could benefit from Australia’s regulatory and industry strengths through the FTA. We will hold a seminar on grains in Beijing on 22 November at which Australian industry representatives will aim to convince Chinese stakeholders that Australia is a safe and reliable grains supplier and that our production will not threaten Chinese farmers.

The eleventh negotiating round is scheduled to be held in the first half of 2008 in Beijing.

For more information, contact the China FTA Taskforce: