China to push Australia on 'fairer' FTA terms

China feels it faces discrimination when trying to invest in Australia and will push for more favourable terms in free-trade agreement talks with that country, analysts say. While the Chinese side was looking for a better deal for its investors, Australia would lobby for lower tariffs for its agricultural exports to China, said John Mollard, a Melbourne-based partner and China specialist at international law firm Baker & McKenzie. "The relationship with China is a priority for the new Australian government," Mollard said. At the Asia-Pacific Economic Co-operation meeting in Bali in October, President Xi Jinping reignited Australia's interest in a trade deal during his talks with the new Prime Minister, Tony Abbott, Xinhua reported. "Our intention is to have a comprehensive agreement ready to be signed when Prime Minister Abbott visits your country in the first half of next year," Australian Mining Minister Ian Macfarlane told a mining conference in Tianjin on November 3. "After eight years and 19 rounds of negotiations, the time has come to make an agreement happen." Alex Malley, chief executive of CPA Australia, an accounting body, said: "The Australian government has made it clear in private and public that it is open for business." Yet in July last year, when Abbott was opposition leader, he said: "It would rarely be in Australia's national interest to allow a foreign government or its agencies to control an Australian business", according to a report by the Australia-China Business Council. Mollard said: "China sees itself as a major trading partner of Australia, yet the US has a historical free kick when investing in Australia." US firms can freely invest up to A$1 billion in Australian businesses without requiring approval from the Australian Foreign Investment Review Board (FIRB). In contrast, Chinese private investors putting more than A$248 million into Australian businesses require approval from the board. Investments of any size from state-owned enterprises (SOEs), including those from China, also require its approval. During the trade talks, Beijing is expected to seek fewer restrictions on Chinese investments in Australia, closer to the terms granted to the US, said Mollard, who has been following the talks closely as a member of the Australia-China Business Council. "We believe China wants to be treated commensurately with its status as the largest trading partner of Australia," he said. China has been Australia's largest trading partner in the past two years and accounts for 24 per cent of Australia's two-way trade, according to official Australian data. There was a 43 per cent fall in Chinese direct investment in Australia in the first seven months of last year, according to official Chinese data. One important reason may be the growing sense among Chinese investors of being subjected to mistrust and discrimination, the Australia-China Business Council report said. Since 2008, several high-profile proposals for Chinese investment have been blocked or substantially modified by the Australian government on the FIRB's advice, the report said. These include the failure of aluminium firm Chinalco to raise its stake in Rio Tinto to 18 per cent for US$19.5 billion. In response to concern from the Australian public, Canberra set out additional FIRB conditions on prospective investments from SOEs and sovereign wealth funds. "These additional FIRB guidelines were widely seen to be primarily directed at Chinese investment and Chinese SOEs in particular," the report said. In March, the Australian government, under then prime minister Julia Gillard, rejected on national security grounds a bid by Chinese technology company Huawei to participate in a A$36 billion (HK$253 billion) broadband network. On November 1, The Australian newspaper reported that Abbott had ruled out Huawei's participation in the network in a letter to opposition leader Bill Shorten. "It was seen as a negative by the Chinese government and Huawei," Mollard said. The China-Australia free-trade agreement should spur a surge in exports of commodities and agricultural products from Australia to China, said David Thorn, Asia head of institutional banking at National Australia Bank, citing the agreement between New Zealand and China, signed in 2008. Since then, dairy exports from New Zealand to China have risen fivefold to NZ$2.6 billion (HK$16.5 billion). A China-Australia free-trade agreement would remove or reduce tariff and non-tariff trade barriers between the two countries, Thorn said. "Removing and/or reducing non-tariff barriers in commodities will help unleash huge growth in exports to China," he said.

China to push Australia on 'fairer' FTA terms

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Amid perceptions of bias, Beijing will press Canberra for equal treatment with US firms to clear the way for free-trade deal, analysts say

Amid perceptions of bias, Beijing will press Canberra for equal treatment with US firms to clear the way for free-trade deal, analysts say