Australia-China Free Trade Agreement negotiations

Subscriber update: Eleventh round of negotiations

27 June 2008

The eleventh round of negotiations on the Australia-China Free Trade Agreement (FTA) was held in Beijing from 16 to 20 June 2008. This was the first round since the Prime Minister agreed with his Chinese counterpart in April 2008 on the “unfreezing” of the negotiations, and since the Minister for Trade agreed with China’s Commerce Minister to implement a more intensive work program.

China tabled a revised tariff offer at the round. The revised offer contained some improvements on industrial products. We have agreed with China that the two sides will intensify discussions in coming months on priority product areas, particularly in agriculture, where Australia considers China’s offer needs to be improved.

At the 10th round we proposed working with China on studies of future production and demand for tariff rate quota products to help inform our market access negotiations. At the 11th round, the two sides discussed progress on the joint study on wool. That study is near completion, with the final results to be discussed at the next round. Other possible studies will also be discussed at that time.

We made good progress on the chapters on sanitary and phytosanitary issues and technical barriers to trade, further narrowing our differences.

The two sides started work at this round on the rules of origin schedule, using change of tariff classification as the principal methodology. It is clear this part of the negotiations will take some time, and we have foreshadowed with China the need for intersessional meetings. We also exchanged views with China on the rules of origin text.

The two sides continued a constructive discussion on customs procedures, an area where the two sides appear able to make progress relatively quickly. We have now canvassed with China the full range of issues affecting trade in goods likely to be incorporated in the FTA. We continued to advocate our proposed approach on a range of non-tariff measures affecting trade, including mandatory re-testing of wool and automatic import licensing.

China has now agreed to coverage of government procurement (GP) in the FTA. However, the two sides have not yet reached agreement on the detail of the coverage. This will continue to be a difficult area as China wants to negotiate market access commitments with Australia after it has joined the WTO Government Procurement Agreement, a process that is likely to take some time.

There was a constructive exchange on the draft electronic commerce chapter tabled by Australia, and some key elements are now agreed. The intent of the chapter is to promote the development of electronic commerce by eliminating barriers to its use.

As agreed by Leaders and Ministers, both sides also discussed areas for early outcomes. Australia’s requests are in the areas of financial services and education and training, while China has nominated investment issues and quarantine. Such outcomes would, of course, be without prejudice to the broader results both countries would want from the FTA. In order to develop Australia’s prioritised lists of early outcomes, the negotiating team consulted relevant sectors in the weeks leading up to the round.

On education and training, China has agreed to seek further clarification or consider our proposals, including in important areas such as qualifications recognition; clarity on funds repatriation; and attracting Chinese students to Australia. We expect to explore the way ahead on these and other issues at the next round.

In financial services, we outlined Australian interests in a shortened list of priorities across the banking, insurance and securities/funds management sectors. There were constructive discussions, however it was clear China would prefer outcomes which require less regulatory change.

China put a number of quarantine early outcomes proposals to Australia for consideration. We reminded China that Australia does not negotiate its approach to import risk analyses, quarantine standards or systems for assessing food safety risks in its FTAs. However, we have undertaken to consider China’s requests.

On investment, China re-iterated its earlier-expressed interest in Australia’s foreign investment screening. China also outlined its interest in our infrastructure access regime, particularly as it relates to minerals and energy. We explained to China that Australia welcomes foreign investment, and assesses all relevant foreign investment applications on a non-discriminatory basis and to ensure they are not contrary to the national interest.

Two additional segments of the round were devoted to general discussions on mining investment and services and movement of natural persons (temporary entry). Based on industry consultation before the round, Australia had prepared a prioritised list of issues of interest for the mining sector, and sought China’s consideration of these requests.

We were able to re-start negotiations on the intellectual property (IP) chapter after China's request to not discuss IP at the 10th round. There were two days of constructive, detailed discussions on the text of the IP chapter. The two sides have put in place a detailed forward work plan to intensify negotiations over the next few rounds. Discussions continued on a possible competition policy chapter, with Australia noting it would like to intensify discussions after China’s new Antimonopoly Law enters into force in August 2008.

The two sides have agreed in principle to hold the next round of negotiations in September 2008.

For more information, contact the China FTA Taskforce: