China and Australia signed a declaration of intent Monday on a landmark free trade deal more than a decade in the making, Reuters reported.
The deal will open up Chinese markets to Australian farm exporters and the services sector while easing curbs on Chinese investment in resource-rich Australia.
President Xi Jinping and Australian Prime Minister Tony Abbott signed the memorandum of understanding during a ceremony in parliament in Canberra.
Australia is trying to wean itself off a reliance on exports of minerals such as coal and iron ore.
It is expanding its food and agricultural exports to the growing Asian middle class, moving from a “mining boom” to a “dining boom”.
China is already Australia’s top trading partner, with two-way trade of about A$150 billion (US$130 billion) last year.
Paul Glasson, national vice-president of the Australia China Business Council, hailed the much-improved access for up to 40 service industries, including health, law and the care of the elderly, as well as for agricultural products such as dairy, rice, wheat, wool and cotton.
Once the agreement is fully implemented, Australian Trade Minister Andrew Robb said in a statement, 99.9 percent of Australia’s present resource, energy and manufacturing exports will enjoy duty-free entry into China.
Xi, in a warm address to parliament, pledged to deepen cooperation with Australia and reaffirmed his country’s willingness to resolve territorial disputes with its neighbours through diplomatic means.
“During my visit, the two sides have decided to elevate our bilateral relations into a comprehensive strategic partnership and announced the substantial completion of FTA negotiations,” Xi said.
“…The Chinese government is ready to enhance dialogue and cooperation with relevant countries to jointly maintain freedom of navigation and safety of maritime rules.”
The agreement gives Australian dairy farmers tariff-free access within four years to China’s lucrative infant formula market, minus any of the “safeguard” caps that restrict competitors from New Zealand.
“Australia has been marginalized from being a major exporter to China in the last few years, one of the reasons being that milk production [there] has been going down over the last decade,” said Sandy Chen, dairy analyst at Rabobank in China.
Wine makers, which now sell more than A$200 million worth of goods to China each year despite tariffs of between 14 percent and 20 percent, will also have the tariffs eliminated over four years.
Tariffs on horticultural products, seafood and other goods accounting for 93 per cent of Australian exports by value will also be reduced to zero by 2019.
Under the deal, a 3 percent tariff on coking coal will be removed immediately and a 6 percent tariff on thermal coal within two years.
“The Australian government has secured the best-ever market access provided to a foreign country by China on services, with enormous scope to build on an export market already worth A$7 billion,” Robb said in a statement.
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