The China-Australia Free Trade Agreement is expected to be signed before the end of the year

From September 1st to 5th, the 21st round of negotiations on the China-Australia Free Trade Agreement was held in Beijing. The two sides conducted comprehensive and in-depth consultations on trade in goods, trade in services, investment, agreement text and other topics in a pragmatic and candid manner, and achieved positive and constructive progress.
After this round of negotiations, the two sides will maintain close contact on various relevant issues and make further efforts to narrow their differences with a view to signing an agreement at an early date.
On September 8, Australian Prime Minister Abbott met with visiting Chinese Foreign Minister Wang Yi in Canberra. Abbott said that Australia hopes to further expand and deepen Australia-China relations, promote the development of economic and trade cooperation between the two sides, promote cultural exchanges, and strengthen defense exchanges and cooperation. Wang Yi pointed out that China and Australia should speed up negotiations on the China-Australia Free Trade Agreement, strive to reach an agreement as soon as possible, and strengthen cooperation between the two countries in agriculture, finance and other fields to cultivate new growth points for cooperation.
On September 7, Wang Yi and Australian Foreign Minister Bishop held the second round of diplomatic and strategic dialogue in Sydney. Wang Yi said that China is Australia’s largest economic and trade partner, largest source of international students and largest source of tourism revenue. Wang Yi and Bishop reached broad consensus on the new positioning of the two countries’ strategic partnership and the new blueprint for trade and investment cooperation. Bishop said that Australia is willing to deepen and expand its strategic cooperative relationship with China based on mutual respect, mutual benefit and win-win results. She also revealed that China and Australia will sign a free trade agreement before the end of this year.
The 9-year long-distance running sprint is coming
Since the China-Australia Free Trade Agreement negotiations were launched in 2005, the two sides have conducted a total of 20 rounds of consultations. Through the joint efforts of both parties, positive progress has been made in the preparatory stage of China-Australia Free Trade Area negotiations.
Premier Li Keqiang stated in the government work report delivered in March this year that China hopes to accelerate the negotiation process of the free trade agreement between the two countries. Australian Trade and Investment Minister Andrew Robb then further stated that there is “no reason why the China-Australia free trade negotiations cannot be completed within this year.”
In early April this year, before Australian Prime Minister Abbott visited China, he expressed on multiple occasions that he hoped to finalize the free trade agreement with China that had been pending for nearly 10 years within this year. During Abbott’s visit to China, the leaders of China and Australia agreed to further accelerate the negotiation process and strive to reach an agreement as soon as possible.
From May 5th to 8th this year, the 20th round of negotiations on the China-Australia Free Trade Area was held in Canberra. At that time, it was said that it was likely to be the last negotiation that would lead to a final agreement between China and Australia. Although the 20th round of negotiations did not resolve all issues, both China and Australia were clearly aware of their respective sensitive areas and laid a good foundation for the advancement of the 21st round of negotiations.
Chen Gong, chief researcher of Anbang Consulting, believes that compared to the first round of negotiations nine years ago, the current China-Australia Free Trade Agreement has more profound significance for China. Nine years ago, China was enjoying the dividends brought by joining the World Trade Organization and was in its golden period of development; nine years later, the dividends of joining the WTO have been exhausted, and foreign trade imports and exports continue to be weak. China needs to open up to the outside world in exchange for a greater degree. Other markets are reciprocally open to Chinese goods and capital.
Chen Gong pointed out that the China-Australia Free Trade Agreement is also of great significance to Australia. Once the agreement is reached, Australia’s agriculture, service industries, and manufacturing industries will all benefit. The free trade agreement reached between New Zealand and China in 2008 has injected great vitality into the country’s dairy industry. This is exactly what Australian farmers, fruit growers, financial services and many other industries hope to achieve through the free trade agreement.
​Crossing the Chasm and Bridging Differences
According to statistics from the Ministry of Commerce, the bilateral trade volume between China and Australia reached US$34.913 billion in the first quarter of 2014, of which China exported US$8.309 billion to Australia and imported US$26.604 billion.
The latest data released by the Australian Bureau of Statistics shows that from May 2013 to April 2014, Australia’s trade with China exceeded 130 billion Australian dollars, accounting for 36.9% of Australia’s total trade with the world, of which exports exceeded 100 billion Australian dollars, an increase of 37.5%. Western Australia’s exports to China accounted for more than 70%, reaching 76 billion Australian dollars, mainly iron ore.
The “Australian Services Trade Report 2013” released by the Australian Department of Trade and Investment in August showed that 2013 was the fastest growing year for Australia’s services trade since 2007. China continued to maintain its position as Australia’s largest services export market. In 2013, Australia’s trade in services The total value of China’s services exports reached 6.9 billion Australian dollars, a year-on-year increase of 9.4%.
The close bilateral trade exchanges between China and Australia have made reaching a free trade agreement a common aspiration of both parties. However, if two economies of such large size want to establish a free trade area, they need to overcome more difficulties than imagined.
It is generally believed that the reason why the negotiations on the China-Australia Free Trade Agreement fell into a stalemate is that the two sides have major differences in areas related to their respective core interests, including mining, financial services, and agricultural and sideline products.
Shen Danyang, spokesperson of the Ministry of Commerce, once said that the economies and trade of China and Australia are highly complementary, and the establishment of the China-Australia Free Trade Area will help further deepen China-Australia bilateral economic and trade relations. However, both sides are clearly aware that they currently have some problems. This is a sensitive area, which is also an important reason why the negotiations on the China-Australia Free Trade Area have been carried out for many years and have not yet concluded.