Business / Economy

New China-Australia FTA will build on trust between two nations

(Xinhua) Updated: 2015-06-17 15:02

CANBERRA -- Australia's Abbott government may have already signed free trade agreements (FTAs) with Japan and Korea, but the "unprecedented" agreement with China signed on Wednesday will long been considered a feather in cap.

Trust, combined with persistence, was required by the two nations through their 21 rounds of negotiations over 10 years that delivered a wide-ranging pact and made Australia the largest developed economy to sign an FTA with the economic superpower.

More than 85 percent of Australia exports to China, its largest trading partner, will enter duty-free when the pact comes into effect, and 95 percent of goods will be duty-free upon full implementation in 11 years' time.

Furthermore, 5,000 working holiday visas will be granted to Chinese citizens each year and Chinese private businesses will be encouraged to invest in Australia with a significant change to the screening threshold.

Prime Minister Tony Abbott said the trust between the nations that had already fueled significant bilateral investment would expand with "the beginning of the next chapter" in Sino-Australian relations.

"The unprecedented agreement we have signed today will not only enhance trade between our two countries, but also too, our investment," he said at the signing ceremony in Canberra on Wednesday. "Far more than trade, investment in another country is a sign of trust.

"The fact that China, over the years, has invested almost as much in our economy as it has in the United States - an economy around 12 times our size - is a sign of trust in Australia."

"And our investment of almost 58 billion dollars ($45 billion) in China with its very different legal and political system is much more than just a bet on the world's coming economic superpower."

"It is proof of our trust in China," he said.

Combined with its FTAs with Korea and Japan, Australia's export market to Northeast-Asia is expected to increase by 13 billion more in 20 years' time than would otherwise be the case.

The FTA with China, which already makes up almost a quarter of the Australian total trade, is expected to facilitate growth in not only Australian goods but also provide an encouraging boost to the services sector.

China has promised to allow subsidiaries based in China to be wholly Australian-owned in industries including tourism, translation, real estate and environmental services.

The market will be opened for Australian financial services expertise, as well as those involved in medical and aged-care -- an expanding market for China and its middle class.

China will benefit from the introduction of technical consulting by Australian mining suppliers in coal bed methane and shale gas extraction.

The removal of tariffs on Australian agriculture will see Australia's famous beef, dairy and wine industries provide cheaper and more accessible products for the Chinese consumer.

Australian sea cucumbers, deer velvet and processed foods such as honey and fruit juice will also enter China duty-free.

For Chinese exporters to Australia, small tariffs on whitegoods and electronics will be gradually phased out.

In a further boost to business, Australia has promised to grant working holiday visas to 5,000 Chinese each year.

But it is the Chinese wishing to engage in direct investment in Australia who benefit most, with the liberalizing of the Foreign Investment Review Board's screening threshold for private investors in 'non-sensitive sectors'.

Agribusiness, media and defense opportunities will continue to be vetted, but investments in other industries up to $750 million will be welcomed with open arms.

Not all are chuffed with the agreement, though.

Australia unions said on Wednesday they were concerned an influx of Chinese workers could "undermine local jobs and increase unemployment".

Others are wary of more foreign investment in residential real estate, blaming it for sky-rocketing property prices in Sydney and Melbourne.

But, Australia's minister for small business, Bruce Billson, has lauded the FTA as "huge news" for the nation's small businesses for opening the door to hundreds of millions of prospective new customers.

It is rhetoric championed too by Australia's Trade Minister, Andrew Robb, who pulled himself off his sick-bed to sign off on the deal for which he had tirelessly worked with China's Commerce Minister Gao Hucheng.

Robb said those concerned by the slowing of the Chinese economy need only look at the size of it.

"You put 6.5 percent across the size of the economy now, it's a much bigger number than 10 percent across the growth or the size of China even in 2008, 2009," he told the Australian Broadcasting Corporation (ABC) on Wednesday.

Robb said the 1,500-page document, which spent months being translating and vetted after the Declaration of Intent in November, will "underpin a lot of our prosperity in the years ahead".

He also saw the possibility of further adjustments in the future, after Australian sugar and wheat growers complained about being left out.

"This is a document which is not just what we sign today," he said. "It's a living document and we'll review (it) progressively."

The China-Australia FTA will come into effect later in the year when the respective parliaments approve the legislation.

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