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China and Australia begin free-trade talks

The first round of historic free-trade agreement (FTA) talks between China and Australia began yesterday, with Beijing's second-highest ranking official saying ties between the two nations had never been closer.

Wu Bangguo (吳邦國), chairman of China's National People's Congress, told a forum in Sydney that the trade talks were "a significant development in our relations."

"It will help expand bilateral cooperation in trade, investment and services and provide even greater horizon for our economic partnership," he said.

Wu, second only to Chinese President Hu Jintao (胡錦濤) in China's political hierarchy, said ties between Canberra and Beijing had never been closer.

"China and Australia enjoy unprecedented interaction and cooperation in science, technology, education, culture, tourism and other fields and frequent contacts between the two peoples," he told the China-Australia Economic and Trade Cooperation Forum.

Australian Trade Minister Mark Vaile also welcomed the negotiations, saying they marked "an historic period in our bilateral relationship."

"As from today, senior trade officials will map the way forward for the negotiations operating on the principle that they will be comprehensive, covering goods, services and investment, and be completed as a single undertaking," Vaile said.

The two governments agreed to begin the free trade talks during a meeting in Beijing last month between Chinese Premier Wen Jiabao (溫家寶) and Australian Prime Minister John Howard.

The breakthrough came after Australia recognized China as a market economy, a key issue for Beijing.

The negotiations are expected to be lengthy and controversial, with Australian trade unions fearing that a trade pact will lead to a flood of cheap Chinese imports, notably clothing, footwear and car parts.

Jemma Bailey, from the Australian Fair Trade and Investment Network, said the deal would also hurt 90 million Chinese workers.

"Basically it leads to a race to the bottom with a downward spiral in wages and environmental standards," she told ABC radio.

Vaile acknowledged there will be some "sensitive issues" in the discussions but said it was important for Australia to take advantage of the healthy Canberra-Beijing relationship to "move through this negotiation as quickly as possible."

China is Australia's third largest trading partner, with two-way trade valued at nearly US$22.5 billion. Key Australian exports include iron ore, wheat, petroleum and coal. China supplies consumer goods and clothing.

Vaile pointed to tourism and education as possible growth areas.
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