Australia-China FTA Negotiations

14 September 2006

Sixth round of negotiations

The sixth round of the Australia-China FTA negotiations was held in Beijing from 31 August to 6 September 2006. Discussions were useful, but market access negotiations on goods did not begin as planned. In preliminary talks, both sides agreed that China would need to provide more detailed information to enable the negotiations to commence. No timeframe was set but Australia is pushing for an early start. In the meantime, Australia’s tariff offer is on hold.

Australia also put forward a proposal that would allow market access negotiations on services and investment to begin at the next round, without prejudice to the position of either side on general services issues, such as the “foundation” issue of whether to take a negative or positive list approach to the sectors to be liberalised. Chinese agencies are considering this proposal. Australia’s strongly held position remains that market access negotiations on services and investment should begin by the end of this year.

Discussion continued of the texts of a large number of FTA chapters previously tabled by Australia. China engaged constructively in these discussions, including on provisions that it has not yet agreed to include in the FTA.

In discussion of the draft text on sanitary and phytosanitary measures (SPS), we continued to stress that the scientific basis for Australia’s SPS (quarantine) decisions is inviolable and that our standards cannot be undermined or our processes circumvented. On technical regulation and conformance assessment (TBT), we have agreed to amend our draft for the next session and will continue our useful discussions on how to overcome technical barriers to trade in either direction while ensuring that standards are protected. On both SPS and TBT, the Chinese are very interested in technical assistance and capacity building commitments.

Work continued on Australia’s draft chapter on trade in goods, including on how to address Australia’s concerns about China’s export taxes, export restrictions and import licensing regulations. We also underlined our manufacturing and agriculture industries’ concerns about Chinese subsidies and held a preliminary discussion about China’s recent subsidies notification to the World Trade Organization.

On rules of origin, China repeated its preference for a regional value approach over the change of tariff classification method favored by Australia. As part of our on-going advocacy program, a delegation of Australian government experts and business representatives will travel to Beijing this month to talk to Chinese industry groups about our experience with the change of tariff classification method.

Improved access for Australian firms to the government procurement market in China will be an important objective for Australia in the FTA. Discussions will continue on how to deal with this issue, particularly given China’s intention of joining the WTO Government Procurement Agreement. Australia’s starting point is that it must obtain terms at least as favorable as those China will give to GPA countries.

On services, talks continued on the text of the five chapters tabled by Australia at the last meeting (on cross-border trade in services, telecommunications, movement of natural persons, education services and financial services). China tabled its proposed text on a general services chapter and one on the movement of business people. China continues to reserve its position on the need for separate chapters on financial services, telecommunications and education. All texts remain on the table.

Australia also tabled text on an investment chapter and we will continue discussions at the next meeting.

Useful talks were held on intellectual property rights (IP). We made clear our determination to achieve a comprehensive IP chapter that would deliver real commercial benefits.

There was also a good discussion on the dispute settlement chapter of the FTA. Both countries have proposed texts, based in both cases on the WTO dispute settlement mechanism, but important differences remain to be resolved.

Competition policy and transparency remain sensitive issues for China and agreement has not been reached on the inclusion of separate chapters on these issues in the FTA.

Next steps

Much work needs to be done to reach agreement on the shape and content of the proposed FTA. The Australian negotiators reminded the Chinese side of the proposal by China’s Premier, Wen Jiabao, during his visit to Australia in April, for breakthroughs in the negotiations in the next one to two years.

Australia is also implementing an advocacy strategy to spread key messages among Chinese decision makers about the likely benefits of an FTA between us and to dispel myths about any perceived disadvantages. As part of this strategy, the Department of Foreign Affairs and Trade is co-sponsoring a conference on FTA agriculture issues in Xi’an this month which will set the scene for market access negotiations on agriculture.

We are also continuing to hold sectoral seminars in Beijing. The most recent was on sugar and seminars on insurance and grains are planned for this year. A Vice-Minister from the Chinese Ministry of Information Industry is visiting Australia this month to discuss regulatory approaches to telecommunications. We also plan to arrange visits to Australia of Chinese officials and regulators in agriculture, mining, engineering and education over the next 12 months, as well as delegations of journalists.

The Department of Foreign Affairs and Trade is continuing to seek input from Australian industries on impediments to trade with China to ensure that we are focusing our efforts on the right issues.

For more information, contact the China FTA Taskforce:

Further information on Australia's existing FTAs.