Talks on Chinese free trade deal falter
Sydney Morning Herald
Talks on Chinese free trade deal falter
By Jessica Irvine
4 October 2006
A meeting between Australia’s new Trade Minister, Warren Truss, and his veteran Chinese counterpart Bo Xilai has failed to advance negotiations on a free trade agreement, throwing into doubt whether a deal can be concluded within a two-year timeline.
In a post-meeting press conference in Sydney yesterday, Mr Bo indicated that China was not inclined to put forward a formal offer to reduce its tariffs on agricultural goods at the next negotiating meeting in December.
"As a matter of fact, negotiation is yet to get into that stage," he said, adding the December meeting would focus on "information exchange".
After a meeting described as "frank" and "candid", the two ministers put their respective cases against cutting tariffs in key domestic industries.
China is reluctant to cut its tariffs on agricultural goods and allow greater access for Australian farmers. It is also disinclined to cut tariffs on services.
On the other side of the negotiating table, Australia is worried a reduction in its tariffs on manufactured goods would lead to a flood of cheap imports, crushing an already struggling domestic manufacturing sector.
Mr Bo rejected such suggestions, arguing the Australian population was relatively small compared to domestic demand in China.
"The reason why we are here to talk about an FTA with Australia is not to take up a large share of your market at all, but rather to demonstrate our friendship towards your country," he said.
Mr Bo also insisted China’s market for agricultural goods was already "one of the most open in the world" after the average tariff rate on agricultural goods was cut from 23 per cent to 15 per cent five years ago when China became a member of the World Trade Organisation.
Additionally, China’s farming population of 750 million, including 200 million living below the poverty line, would be threatened from too much competition from Australian farmers, Mr Bo said.
"Your agricultural industry is obviously far better and stronger than ours," he said.
But the loquacious Mr Bo expressed confidence that an agreement could be reached.
"Although we have encountered certain difficulties in the negotiation of the free trade agreement we’re both very confident in joint efforts in order to settle the problems encountered so far.
"As far as I can tell, Mr Truss is a pragmatic person with whom we have concrete progress."
Mr Truss, three days into the job, maintained a brave face.
"We have established a good working relationship and we’re both anxious to see that we can build on that goodwill to put in place a free trade agreement according to the time schedule that has been established."
Chinese premier Wen Jiabao set the two-year timeline in April.
