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Mixed signals on free trade

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Beijing officials and business- people from China and Australia could be forgiven for feeling more than a little confused at this moment over the proposed free-trade deal between the two nations. That's because two key ministers in Canberra disagree over just how comprehensive the agreement should be.

Listening to Trade Minister Mark Vaile on August 8, they would have been reassured about Canberra's commitment to open its markets as widely as possible to the Chinese.

But only 12 days later, Industry Minister Ian MacFarlane said he would not abolish import tariffs on two of Australia's most politically sensitive and major industries - automotive and clothing - as part of the trade agreement.

Mr Vaile's remarks, delivered in the course of a major speech in Canberra, gave no hint of the protectionist stance that Mr MacFarlane is championing. If anything, Mr Vaile's comments were positively bullish on the abolition of trade barriers. He said the Australia-China '[free-trade] negotiations offer the potential to secure substantial tariff reductions on Australian exports to China'.

Not only is Mr Vaile committed to removing protectionist subsidies on imported clothing and cars, but he sees the trade deal as promoting 'deep integration by addressing regulatory and other border measures, as well as security of supply'.

But Mr MacFarlane has, perhaps unwittingly, undermined Mr Vaile's stance with his uncompromising promise last weekend. He said the Australian government had no intention of unwinding the long-term industry structure under which the automotive and clothing industries operate.

That structure, which includes tariffs and billions of dollars in industry assistance, are simply 'not negotiable' in the context of the Australia-China trade deal, Mr MacFarlane said in a media interview.

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