Australia becomes first country to open service sector to China
China and Australia signed a landmark free trade agreement on Wednesday, which, along with a recent deal with South Korea, is expected to serve as a positive example and will help advance economic integration in the Asia-Pacific region.
Chinese Commerce Minister Gao Hucheng and Australian Trade Minister Andrew Robb signed the China-Australia Free Trade Agreement (ChAFTA) in Canberra after 10 years of negotiations.
In a congratulatory letter to his Australian counterpart Tony Abbot on Wednesday, Chinese President Xi Jinping said the deal will provide a platform for greater cooperation that benefits each other. It will also serve as an example for high-level trade arrangements in the Asia-Pacific region, which will help regional economic integration.
Abbott also said the historic agreement signals a new beginning for the two countries, and that he looks forward to the two sides benefiting from the agreement, according to the Xinhua News Agency.
Under the deal, 85.4 percent of bilateral exports will be tariff-free immediately after it takes effect, according to an online statement on China's Ministry of Commerce (MOFCOM) website on Wednesday.
When ChAFTA is fully implemented, 97 percent of Australian products to China and all Chinese products to Australia will enjoy tariff-free entry.
China has been Australia's largest trade partner since 2010 and Australia was China's eighth largest trade partner in 2014, according to MOFCOM's statement.
Compared with other free trade agreements involving China, ChAFTA has a broader tariff-free coverage, Tu Xinquan, executive director of the China Institute of WTO Studies, told the Global Times on Wednesday.
China and South Korea signed a free trade agreement on June 1 which would remove tariffs on about 90 percent of all products traded between the two countries in 20 years.
Australia and China have complementary industries, so removing tariffs will not bring too much pressure on Chinese enterprises, Chen Fengying, a research fellow at the China Institutes of Contemporary International Relations, told the Global Times on Wednesday.
China mainly imports minerals, such as iron ore, from Australia and exports manufacturing products such as clothing and telecommunications equipment to the country, according to the website of the Australian Department of Foreign Affairs and Trade.
As for the agriculture industry, Tu said that Australian products can meet the needs of China's growing middle class and encourage domestic producers to improve.
China's dairy industry, for example, is expected to work harder for survival in the face of Australian competition when the tariffs gradually come down.
In addition to the removal of tariffs, Australia becomes the first country in the world to open its service sector to China with a negative list and also pledged a certain amount of jobs and holiday working visas to Chinese citizens per year.
The two countries have mutually granted most-favored-nation status and lowered the review thresholds for corporate investments.
"ChAFTA is a comprehensive and high-level free trade agreement," Chen said.
Most free trade agreements mainly focus on goods and services trade, while ChAFTA includes lowering review thresholds for investments as well as some other areas such as e-commerce and government procurement, she said.
China's FTA with Australia and South Korea are expected to persuade more parties in the Asia-Pacific region to join the trend, observers said.
China, South Korea and Japan have held discussions on a trilateral free trade agreement since 2013, but have not reached a final agreement.
If bilateral ties between China and Japan can be improved, it is possible to have the trilateral free trade zone, Chen said, noting the China-South Korea FTA has brought some pressure on Japan.
Also on Wednesday, the Japanese Chamber of Commerce and Industry (JCCI) released its 2015 Japanese Business in China White Paper, which said that the JCCI expects China, Japan and South Korea to sign a free trade agreement soon.
Japan has been involved in talks on the US-lead Trans-Pacific Partnership Agreement (TPP), but the trade initiatives have not progressed much in recent years.
It would be hard to hold ministerial-level talks this month on TPP, Akira Amari, Japanese Economic Minister, said on Wednesday, as US lawmakers pushed back the deadline to vote on a key legislation concerning the TPP pact to July, according to Reuters.
