Asia-Pacific

Free trade talks with Australia underway

By Ai Yang (China Daily)
Updated: 2010-02-25 07:47

Australia and China resumed free trade talks Wednesday after a delay of 14 months, a move the Australian government said proved their healthy trading relationship, although Chinese experts say future uncertainties still remain.

AFP said the talks, which are due to last three days, are being held in Canberra. Trade Minister Simon Crean said Australia's vast resources sector was the subject of intense interest from China, while adding that the framework should reflect the importance of investment as a "two-way street".

"Because Australia too has significant interest in getting greater investment into the Chinese economy", he was quoted as saying.

Australia and China first began talks on a free trade deal in April 2005, but the talks halted after the 13th round of negotiations in Beijing in December 2008.

Su Hao, director of the Strategy and Conflict Management Research Center said the establishment of a Free Trade Agreement (FTA) is very important for both countries. "It shows that bilateral ties are recovering. The two countries are economically complementary to each other, especially on trade."

Su said the proposed free trade agreement would be beneficial to both countries and China and Australia should take each other's interests into consideration.

"The country (Australia) has been generally cooperative regarding Chinese politics in the past, especially on the Taiwan issue. But last year also saw some regrets over deteriorating diplomatic ties," Su said.

"China was classified as a strategic threat by the Australian Defense White Paper, and the ties were further strained by exiled Uyghur separatist Rebiya Kadeer's visit to Australia. The relationship has not completely recovered yet", he added.

Pang Zhongying, an international relations expert with Renmin University told China Daily the Sino-Australian relationship has always been a complex one.

"On one hand the Australians want more economic engagement, and on the other hand it does not forget to work with other international players to counterbalance China's rising power."

Pang said Australia's Defense Ministry's growing alarm over China's "strategic implications" - as described in the May 2009 White Paper - was just such an example.

"The bilateral ties are defined by more than just their trading relationship. There are a handful of factors regarding Australia's own interest in the Asia-Pacific region."

Relations were further tested in June last year when the Australian Rio Tinto executive Stern Hu was arrested on suspicion of bribery and commercial espionage during difficult talks to set a contract price for iron ore, Australia's biggest export to China. The Australian passport holder and three Chinese Rio employees are now awaiting trial in Shanghai.

China is Australia's biggest trading partner, with two-way trade worth some AU$83 billion ($74 billion) in the 2008-09, and China buying more than AU$25 billion worth of Australian iron ore and coal according to Reuters. However, Crean said he believes Hu's arrest had not disrupt the trading relationship between the two countries, which has since gone from strength to strength.

To ease the tensions and reinvigorate the stalled FTA talks, Chinese Vice-Premier Li Keqiang met Australian Prime Minister Kevin Rudd last November.

Su said:"There is mutual reliance between the two countries especially in trade, but the Australian price for its iron ore is too high." Australia should also look after China's interests he believes and in return China should provide a larger market to its partner, although it may mean Chinese products facing more competition.