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.
