Nothing cropped from agriculture in Australia-China FTA
The Australian | 28 Sep 2006
Nothing cropped from agriculture in Chinese FTA
Rowan Callick, China correspondent
ALL agricultural products remain on the table in talks for a free trade agreement with China - which Agriculture Minister Peter McGauran describes as the "single most important thing" anyone can do for Australia’s farming industry.
Mr McGauran met Agriculture Minister Du Qing-lin in Beijing on Tuesday, then flew down to Xian, the ancient city in the heartland of Chinese farming, where yesterday he opened a conference between Chinese and Australian agricultural experts on the FTA.
"I believe the single most important thing any of us can do for Australian farming, if there is one wish for it above all else, it is an FTA with China. I haven’t come away with the impression, as with the US with sugar", that any particular commodity would present a problem, Mr McGauran said in Xian.
"China has a need for all commodities and we are already having some enormous successes - with mandarins now on sale, and navel oranges on the way."
China’s Vice-Minister for Agriculture Fan Xiao-jian told the conference that China’s 800 million members of farming communities reached an average income of $US1 a day only last year. He said the country had a "redundant rural labour force" of 150 million and agriculture would remain less competitive than other Chinese industries for the near future.
Since its World Trade Organisation accession almost five years ago, China’s agriculture tariffs averaged only 15.1 per cent, "among the most liberal in the world", Mr Fan said.
But under its WTO terms, China also has a wide range of tariff rate quotas (TRQs), under which once an import quota is filled at a set, low rate, the next imports are charged a much higher tariff. This creates problems for Australian exports, adding uncertainty about prices and about market access.
Grain TRQs can reach 65 per cent and cotton 40 per cent. And wool is reaching the limit of its current quota.
Australia’s top tariff rate is just 5 per cent, and quarantine appears the main issue for Chinese exporters, especially of horticulture. But this does not come within the FTA negotiations.
Mr Fan said China needed to strengthen its production capacity and competitive edge in farming. Australia offered good quality and low cost, especially in broadacre commodities, and China competed best in horticulture, fisheries and processed foods.
"Chinese and Australian agriculture is highly complementary, and there is great potential for co-operation," Mr Fan said.
Australia’s trade surplus in farm goods is rising rapidly, from $US1.3 billion in 2002 to $US2.1 billion last year. Australia was the leading exporter to China of wool and barley, second in sugar and third in meat and cotton.
Urging "open, pragmatic, flexible negotiations", Mr Fan said: "A balanced, high-quality FTA will help to consolidate our friendship, enhance our co-operation and produce a win-win outcome for both countries."
Mr Fan warned of "the need to prevent damage to Chinese interests due to excessive liberalisation", and of the importance of food security, poverty alleviation, and preventing unemployment.
Mr McGauran told the conference: "Australia understands the importance of rural stability in China, and the critical role that agriculture plays in that."
He said: "As agricultural producers, we have more in common than may seem at first glance. Our farming sectors are both predominantly small holdings, overwhelmingly owned and operated by individual families." But Australia’s population is only just over half of that of Shaanxi province, of which Xian is the capital. Mr McGauran announced a new $5.5 million program of technical co-operation in dairy, wool and grasslands management.
The minister said later that the most important message he had received from this visit to China was "the acceptance that agriculture will be part of the FTA".
The last, sixth round of negotiations, in Beijing a month ago, was to have seen both sides table their detailed offers and requests. But the Chinese team - for reasons that remain unclear - was not ready to do so. The next round is in Canberra in the first week in December, when Australia hopes such an exchange will take place and the detailed bargaining can thus begin.
Mr McGauran said that despite reports that the Australian cabinet would not allow negotiation of the automotive and textile clothing and footwear industry plans, "everything is still on the table, a point we’re making strongly and repeatedly".
All of the Australian presentations to the Xian conference yesterday stressed the country’s inability to dominate Chinese markets. China accounts for about 9 per cent of Australia’s total food exports.
Wallace Chang, marketing manager in Beijing of the Australian Wheat Board, said: "Following an FTA, China would not be flooded by Australian wheat - Australia already has many markets, and has limited capacity to significantly increase production."
Getting over this message for all commodities is "the key to progressing the FTA", Mr McGauran said.
