Feb. 23 – Australia will restart free trade talks with China after a 14 month pause when diplomatic relations were strained after Chinese authorities arrested an Australian mining employee and objected to Uighur leader Rebiya Kadeer’s visit to Australia.
Government representatives will hold negotiations in Canberra and resume talks on issues tackled in December 2008. “It is the 14th round, and it is on this week between the 24th and the 26th in Canberra,” a trade spokeswoman told AFP.
China wants to address tariff issues and the impact of Australian imports on domestic prices. Australia in the meanwhile has maintained economic growth and avoided a recession despite the global financial crisis due to robust demand for their natural resources within the Asian region specifically from Japan, China, South Korea and India.
Australia’s free trade agreement with the Association of Southeast Asian Nations came into effect just last month. It also plans on signing trade agreements with Japan, India, the United States, New Zealand, Singapore, Chile, Brunei, Peru and Vietnam.
“We see China as an opportunity, a huge opportunity too, in terms of its essential inter-relationship with our economy, its dependence on our resources and energy,” Trade Minister Simon Crean was quoted by the AFP as saying.
“The opportunity for investment flows between both countries. The deepening inter-dependency between us and China is one of real opportunity, not threat.”
As a recent immigrant to Australia from the USA, I couldn’t agree with the Australian Trade Minister more. The FTA between Australia and China would be between a developed country that is “semi-neutral” in global affairs and a large developing one that is aiming for “harmonious development” in the world.
The two economies of Australia and China are in a way complimentary. Australia has a small population, minerals, agriculture, good universities and a service sector that survived the current global financial crisis. China has a large population, little iron, high sulphur coal, a lack of agricultural land for its population size, universities that are technically good but fail to impact creativity and flexibility in their graduates, large-scale manufacturing, an inefficient but well-funded state directed banking system, and lacking accountants, lawyers, consultants, etc.
A FTA between the two countries could be a win-win situation. In return for easier entry for Chinese companies in Australia’s resource markets or agriculture (e.g. sugar), China could give the Australian service sector companies (accounting, banking, consulting, legal, etc) and universities the ability to set up in China with over 50% of the equity.
I think that the service sector competition from a friendly country would be good for China forcing local companies to innovate.