Beijing nears the barriers in FTA race
The Australian, Canberra
Beijing nears the barriers in FTA race
In both Australia and China, farmers are an integral part of the national identity and culture, writes China correspondent Rowan Callick
2 October 2006
The weather was auspicious: lovely, unbroken, pouring rain.
For many farmers in both China and Australia, whose agricultural trade experts were attending a conference last Wednesday, rain is a rarity, so longing looks were cast at the muddy streets and umbrellas outside.
The conference, focused on the agricultural issues involved in negotiating a Free Trade Agreement, was held in Xian, the ancient capital of 13 Chinese dynasties and the heartland of Chinese agriculture.
The nearby Wei River, a tributary of the Yellow River, once a mighty flood, is now just a shallow trickle, making a kilometre-long bridge spanning it appear simply redundant.
Only 7 per cent of China’s land is arable, and it is losing about 3,500sqkm per year to deserts in the north, where the Gobi Desert is advancing steadily towards dusty Beijing.
In the past - not only that of the People’s Republic but also of imperial China - China’s leaders were anxious to guarantee domestic food security, and they also sought to balance as far as possible each trade item, so that no imports appeared to exceed exports to the same destination.
Such sentiments, long-held, also take time to subside. So it was not surprising to hear concern from Chinese participants at the conference about the lack of balance in the agricultural trade between the countries.
China’s Vice-Minister for Agriculture, Fan Xiao-jian, told the conference that the trade surplus in farm goods had grown rapidly in Australia’s favour over the past four years - from $1.7 billion to $2.8 billion.
Australian Agriculture Minister Peter McGauran later pointed out that this should be viewed in the context of an overall trade surplus standing at $5 billion in China’s favour.
To their domestic audiences, politicians and industry leaders naturally list achievements. But once trade negotiations begin, this is turned on its head. Both parties compete strenuously to appear the most humble.
Fan told the conference how Australia was the leading exporter to China of wool and barley, second in sugar and third in meat and cotton. McGauran said Australia’s agricultural production was just one 10th of China’s.
If this had continued through another day, we would have reached the point of Monty Python’s Yorkshiremen:
We lived in a cardboard box in the middle of the motorway.
Real cardboard? That’s luxury.
For China, this is make-or-break stuff, however.
Any big gains in the FTA in agriculture would shake down in Australia’s immediate favour, since the major barriers are in China, especially its tariff rate quotas.
The case is also being made that strengthening connections between the two farming communities would lead to long-term gains in production efficiency in China’s agriculture, improving its service to its vast domestic market and its chances of increasing its exports to other countries.
In both countries, as McGauran pointed out, farmers are an integral part of the national identity and culture.
In China, though, they amount to even more than that. They and their families comprise two-thirds of the population, some 800 million people. It was they who put the Communist Party in power 57 years ago yesterday, it was they who propelled China into its 30-year growth phase. Their production soared as soon as collective farms were abolished after Mao Zedong died.
And it is farmers’ dissatisfaction that is starting to transform Chinese politics and economics.
The fourth generation of leaders of the Communist dynasty, led by President Hu Jintao and Premier Wen Jiabao, have sought to reorientate national priorities towards the country’s agricultural heartland with increasing pace, and with increasing impatience, flying in the face of provincial officials in places such as Shanghai who still seem hung up on fancy property development. Hence, in part, the dramatic sacking of the party boss in Shanghai a week ago.
Onerous school fees have been slashed, along with a range of other charges that helped stoke rural unease. The biggest resentment has been fuelled by the seizure of land by local officials in cahoots with developers, and the central Communist Party disciplinary investigators are currently seeking out model culprits to throw to the farmers as a sign of goodwill.
Farmers, not foreign investors or factory workers, are plumb in the centre of Beijing’s priorities today.
That’s why this section of the FTA needs specially sensitive handling. On last week’s form, the news is promising.
China’s delegates to the Xian conference were chiefly agriculture academics and trade officials, rather than working farmers.
But that’s no surprise. Most Chinese farmers work tiny plots of land, very smartly but often with little or no mechanical aid. Agribusiness has only recently begun to emerge, as farmers, especially those near cities, have sought to sell their land rights and seek other work.
A sizeable proportion of the new corporate farming enterprises are controlled by the People’s Liberation Army, whose influence is immense in the Xian area, where defence industries have played a key role in rebuilding the population to the same size, 7 million, as during the Tang dynasty (618-907 AD).
So while big farming is just starting to gain room to grow, it is vital for Australia to convince the sort of agriculture academics who came to the FTA conference. For academics play an influential role in public life in China, their arguments feeding in to key documents that help determine the positions of players on the State Council and above.
At the same time, there is no substitute for positive sentiment trickling down from the top. Ni Hongxing, deputy director of China’s Agricultural Trade Office, stressed the importance of the positive vibes that emerged from the April visit of Premier Wen to Australia.
Ni said simply: "China will rely more in the future on Australian imported products."
The unanimity of the Australian voices at the conference was almost uncanny, demonstrating a welcome professionalism perhaps inevitable as the country ticks off one FTA after the next: "We’re small, efficient, non-threatening and can offer plenty of technical and management advice. We’re here to help."
The former president of the National Farmers Federation, Peter Corish, began by wishing he could take the rain home with him. He said China was already a major market for wool, cotton, barley, wheat and sugar, and a promising one for dairy - especially for cow exports - for wine, horticulture and meats.
He highlighted synergies, including the two countries’ seasonal variations, being in opposite hemispheres. China’s growing wealth will increase the urban demand for new farm products, he said, and Australian experience could help Chinese farmers to benefit. Lower barriers would mean lower prices, benefiting consumers, he added.
And - the bottom line - "an FTA without a comprehensive outcome for agriculture will not pass the Australian Parliament".
Ric Wells, Australia’s chief FTA negotiator with China, said China needed access and price predictability, and advanced technology. "Increasing the stake of Australian agricultural industries in China" is the best way to achieve that.
One of the main potential barriers to an FTA now seems surmountable. But we are still waiting for China to place its opening offer on the table. That now needs to happen in Canberra in a couple of months, when the teams meet again.
If not, John Howard will have to pick up the phone again to his comrades in Beijing, maybe letting slip that FTA talks with Tokyo seem fast-approaching.
