While most Australians are sunning themselves on the beach this Christmas, a handful of bureaucrats in the nation's Department of Foreign Affairs and Trade will be burning the midnight oil on a joint Australia-China study on a proposed free-trade agreement. The study is due to go to Australia's Trade Minister Mark Vaile and his Chinese counterpart Bo Xilai by the end of next March. Prime Minister John Howard's recently re-elected government wants to ensure that Australia's long-term economic interests with the world's fastest-growing economy are secured quickly. But while the recently signed Australia-US free-trade agreement did not create any major political headaches for the Howard government, the proposed Chinese deal could prove a different story. There is no doubt that for Australia, China is an increasingly critical trading partner. Mr Vaile has noted that Australia's commercial relationship with China is expanding more rapidly than with any other major trading partner. But to enter a free-trade deal, the government will first have to accord China 'market economy' status. This will mean that Australia's customs minister will have to rely on information from China about the price of goods, when Australian companies complain that Chinese products are being dumped on to their home market at extremely low prices. Since 1999, Australia has investigated nine anti-dumping complaints made by Australian businesses against China. In four of those cases, anti-dumping measures have been imposed. Two of Australia's leading lobbies representing industry and workers are arguing that China should not have 'market economy' status at this point because it is still making the transition from a state economy. The Australian Industry Group, a powerful business lobby, recently published the results of a survey of 850 manufacturing companies' attitudes towards China. A staggering 90 per cent said that they are restructuring their business in response to the pressures being generated by Chinese annual growth rates of 8 per cent. But more worrying, 55 per cent of these businesses see China as a competitive threat in the Australian domestic market, although 44 per cent view China as an opportunity for sourcing low-cost inputs. Only 13 per cent viewed a free-trade agreement with China as being beneficial to their company. The industry group's chief executive, Heather Ridout, says that despite China's accession to the World Trade Organisation three years ago, 'on non-tariff areas such as intellectual property, on technical barriers and government regulatory arrangements, China is falling far short of its WTO commitments'. On the other side of the fence, the Australian Council of Trade Unions, which represents two million workers, also fears a fully fledged Australia-China free-trade agreement. Its secretary, Greg Combet, in an article published recently, said that from a union standpoint, 'Chinese workers must have basic rights, and Australian workers should not have to compete in a rigged market'. Mr Combet argues that for the Australian government to accord the Chinese 'market economy' status to facilitate a free-trade deal would be 'absurd' because 'such a move would diminish our ability to protect Australian industry against dumping'. Mr Vaile's first opportunity to test the temperature of the Australian political waters on the Chinese free-trade deal will come after he receives the study in March. That is when he has to decide whether to press the green button by granting China market economy status so he can begin negotiations to flesh out a deal. On current indications, he has some difficult political terrain to traverse first. Greg Barns is a political commentator in Australia and former adviser to the Australian government