China and Australia yesterday signed a declaration of intent on a landmark free-trade deal more than a decade in the making, opening up markets worth billions to Australia and loosening restrictions on Chinese investment.
The deal aims to open up Chinese markets to Australian farm exporters and the service sector, while easing curbs on Chinese investment in resource-rich Australia.
Australian Prime Minister Tony Abbott and Chinese President Xi Jinping (習近平), together with a retinue of government ministers, signed the memorandum of understanding during a ceremony in parliament in Canberra.
Australia is attempting to transition from a reliance on exports of minerals such as coal and iron ore to expanding its food and agricultural exports to a growing Asian middle class, moving from a “mining boom” to a “dining boom.”
China is already Australia’s top trading partner, with two-way trade of around A$150 billion (US$130 billion) last year.
Australia China Business Council national vice president Paul Glasson hailed the much-improved access for up to 40 service industries including health, law and aged care, as well as for agricultural products such as dairy, rice, wheat, wool and cotton.
Once the deal is fully implemented, Australian Trade and Investment Minister Andrew Robb said in a statement that 99.9 percent of Australia’s resource, energy and manufacturing exports are to receive duty-free entry into China.
Xi, in an address to Australia’s parliament, pledged to deepen cooperation with Australia and reaffirmed China’s willingness to resolve territorial disputes through diplomatic means.
“During my visit, the two sides have decided to elevate our bilateral relations into a comprehensive strategic partnership and announced the substantial completion of free-trade agreement negotiations,” Xi said.
“The Chinese government is ready to enhance dialogue and cooperation with relevant countries to jointly maintain freedom of navigation and the safety of maritime rules,” he said.
The agreement gives Australian dairy farmers tariff-free access within four years to China’s lucrative infant formula market, minus any of the “safeguard” caps that currently restrict competitors from New Zealand.
“Australia has been marginalized from being a major exporter to China in the past few years, one of the reasons being that milk production [there] has been going down over the last decade,” said Sandy Chen, dairy analyst at Rabobank in China.
Winemakers, currently selling more than A$200 million worth of goods to China each year despite tariffs of between 14 and 20 percent, are also to see tariffs eliminated over four years.
Tariffs on horticultural products, seafood and other goods accounting for 93 percent of Australian exports by value are also to be reduced to zero by 2019.
Robb described the agreement as the most favorable ever granted by China to a Western nation, especially in the service sector.
“The Australian government has secured the best-ever market access provided to a foreign country by China on services, with enormous scope to build on an export market already worth A$7 billion,” he said in a statement.
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