Australia-China FTA Negotiations

Subscriber update: Eighth round of negotiations

12 April 2007

The eighth round of the Australia-China FTA negotiations was held from 26 to 30 March in Beijing.  Useful market access discussions on trade in services continued and talks began on barriers to trade in investment.  Progress was also made in discussion of some technical areas of the FTA.

China did not, however, deliver an improved offer on market access for goods as requested by Australia at the previous round in December.  When we tabled Australia’s opening offer on goods in December, we stressed that it was conditional on a similarly high-quality offer from China, as well as on improved access for Australia to China’s services market and on good outcomes on non-tariff barriers and other issues, including improved protection of intellectual property rights.  We told the Chinese that we believed China’s offer could be improved, and asked them to come back with a better offer. 

The Chinese side told us at the eighth round that it was not in a position to provide an improved offer for goods, citing time constraints as one of the reasons.  We emphasised that we expected China to offer the same degree of trade liberalisation as Australia before we would be willing to move to the next stage of detailed, line-by-line tariff negotiations. 

Negotiations did continue on various non-tariff barriers to trade in goods as identified by Australian industries in our consultations over the past two years.  There were no concessions offered by China on these issues at the meeting although China provided more background on some of the measures and will further consider our requests to abolish or amend these impediments.  We plan to raise more in future rounds, in each case seeking a particular outcome. 

Work continued on goods issues.  Some areas, such as import licensing, remain difficult.  We have begun putting suggestions to China as to how we might address the concerns of Australian industry about China’s automatic import licensing system, and we flagged that we would introduce more detailed proposals at the next round.  We notified China of our intention to table text on transitional safeguards at the next round.

The issue of the overall rules of origin methodology to be used in an FTA remains unresolved.  We prefer a change of tariff classification (CTC) approach while the Chinese side prefers a regional value-added method.  We will provide examples of CTC rules at the next round as a way of demonstrating the benefits of our preferred approach.

In a welcome step forward, China announced its agreement to include a chapter on customs procedures in the FTA.  This is important for us, as inconsistencies in China’s customs administration have been raised as a concern by Australian industry.  But China has indicated some reluctance to include substantive provisions on customs procedures and these talks have a long way to go.

At the eighth round we also continued our discussion on text for the proposed free trade agreement covering sanitary and phytosanitary measures (SPS) and technical regulation and conformance assessment (TBT).  Work also continued on electronic commerce and government procurement. 

Market access negotiations on services began at the previous round in December.  Both sides presented lists of barriers they face in each other’s services sectors with proposals on how to lower them.  At that round, Australia tabled requests in the legal, financial, education, construction, engineering, architecture and town planning sectors.  At the eighth round, Australia tabled lists of barriers in the accounting, transport and logistics, telecommunications, mining, tourism, environment and sporting sectors.  This completed the tabling of our barriers in major services sectors of interest to Australia.  

Across all of the sectors raised by Australia, the barriers we have identified address market access restrictions and discriminatory regulations that mean that Australian firms cannot operate on the same basis as local Chinese firms.  Our barriers also address the effect of some domestic regulations in undermining market access (such as lack of recognition of qualifications of Australian professionals).

At this latest round, Australia and China also exchanged lists of barriers to investment in each other’s country.  We tabled a list of barriers facing Australian investment in China, particularly in the mining sector.

Australia reiterated its strong case for a comprehensive intellectual property rights chapter in the FTA with provisions for a consultative mechanism on intellectual property.  Australia also raised concerns regarding the infringement of Australian companies’ IP rights when submitting tenders and satisfying regulatory requirements in China.  Much of the meeting focused on concerns raised by China in relation to key provisions in Australia’s draft IP chapter.  Strong differences remain in our approaches, underlining the sensitive and difficult nature of the negotiations.

Australia’s active program of advocacy, aimed at convincing influential government, academic and business figures in China that China has little to fear from a high-quality FTA with Australia, is continuing.  We have conducted three ministerial-level conferences and nine sectoral seminars in China to date to explain to Chinese decision makers the benefits of a truly liberalising agreement and to dispel any myths about the disadvantages.  Our most recent seminar, on accountancy services, was held in Beijing just before the last round.  We aim to hold further seminars this year, including one on grains and on telecoms.  Chinese experts on mining investment, vocational education and training, and intellectual property rights have also been invited to visit Australia in the next few months as part of our advocacy program.

Our next negotiating round is scheduled for late June.

For more information, contact the China FTA Taskforce: