26 June 2008
China FTA: Update
Dear Services and Investment Stakeholder
I am writing to update you on the 11th round of negotiations on the Australia-China Free
Trade Agreement (FTA), which was held in Beijing from 16 to 20 June. This was the first
round of negotiations since the Prime Minister agreed with his Chinese counterpart in April
on the “unfreezing” of the negotiations, and since the Minister for Trade agreed with China’s
Commerce Minister to implement a more intensive work program for the negotiations.
In an effort to build the confidence of both sides in their ability to reach a final outcome, both
sides agreed to explore early outcomes in a few key areas. Mr Crean nominated financial
services and education and training as two areas in which Australia wanted to seek early
outcomes; China nominated investment and quarantine. Such outcomes would, of course, be
without prejudice to the broader results both countries would want from the FTA.
In order to develop Australia’s prioritised lists of early outcomes, the negotiating team
consulted relevant sectors in the weeks leading up to the round, in order to ensure we had the
most accurate and up-to-date understanding of business interests. We would like to take this
opportunity to thank those peak bodies, businesses and institutions who participated in these
consultations.
During the FTA negotiation round last week, the overall atmospherics of the discussions on
these topics was constructive. However, these remain complex issues, and China continued to
indicate that it would find it very difficult to undertake commitments under the FTA that
involve legislative or regulatory reform.
On education and training, China has agreed to seek further clarification or consider our
proposals, including in important areas such as qualifications recognition; clarity on funds
repatriation; and attracting Chinese students to Australia. We expect to explore the way ahead
on these and other issues at the next round.
In financial services, we outlined Australian interests in a shortened list of priorities across
the banking, insurance and securities/funds management sectors. While engaging
constructively, it was clear China would prefer outcomes which require less regulatory
R G Casey Building, Barton ACT 0221
www.dfat.gov.au
Telephone: 02-62611111
change, and we will need to undertake further consultation to find a way to make progress on
these issues.
On investment issues, China reiterated its earlier-expressed interest in Australia’s foreign
investment screening regime. China also outlined its interest in our infrastructure access
regime, particularly as it relates to minerals and energy. We explained to China that
Australia welcomes foreign investment and assesses all relevant foreign investment
applications on a non-discriminatory basis, and to ensure they are not contrary to the national
interest. We indicated to China that it would be very difficult to meet their requests given the
legislative and regulatory change these would entail.
Two additional segments of the negotiating program were devoted to general discussions on
mining investment and services and movement of natural persons (temporary entry).
Based on industry consultation before the round, Australia had prepared a prioritised list of
issues of interest for the mining sector, and sought China’s consideration of these requests.
China reiterated its interest in greater access to Australian temporary entry provisions.
In other working groups, three topics of possible interest to you were discussed – intellectual
property, government procurement and e-commerce. The reports from these discussions are
presented in the following paragraphs.
We were able to re-start negotiations on the intellectual property (IP) chapter after a
fairly long hiatus due to China's decision to not discuss IP at the last round. There were
two days of detailed discussions on a consolidated text of the IP chapter which
incorporated proposed text submitted by Australia and China. Renewed engagement
contributed to a very constructive exchange. The nature and extent of differences in
positions on a range of issues have been clarified, and both sides have a clearer sense of
the likely scope of the IP chapter for this FTA. The two sides have put in place a detailed
forward work plan to intensify negotiations on the IP chapter over the next few rounds.
We have been pressing China to include government procurement (GP) in the FTA to
ensure that Australian goods, services and suppliers receive at least the same level of
access to China’s GP market as it will provide to members of the WTO Agreement on
Government Procurement after it joins that agreement. Australia is not a member of the
WTO GPA, so the FTA is the only way for us to secure binding access to China’s GP
market. In a major move forward, China has now agreed to coverage of GP but the two
sides have not yet reached agreement as to whether this will entail a detailed chapter or a
commitment to future negotiations. This will be continue to be a very difficult area as
China does not want to negotiate market access commitments with Australia until after it
has joined the WTO GPA.
There was a constructive exchange on the draft electronic commerce chapter tabled by
Australia. The intent of the chapter is to promote the development of electronic commerce
by eliminating barriers to its use and promote business and consumer confidence. Having
resisted our proposal for much of the negotiations, China has now accepted the value of
including a chapter and is engaging positively on our text.
R G Casey Building, Barton ACT 0221
www.dfat.gov.au
Telephone: 02-62611111
The next round of negotiations with China is proposed to take place in Canberra in the first
half of September. As well as continuing discussions on all issues raised last week in Beijing,
Australia has flagged that we intend to re-launch negotiations on the telecommunications and
legal services sectors at the next round. In preparation for that, we plan to speak to interested
Australian businesses in the lead-up to the round, and would welcome your getting in touch
by email to express your interest in being part of this consultation process.
We intend to discuss other important services sectors and investment issues in subsequent
rounds.
Yours sincerely
Alison Burrows
Lead Negotiator, Services and Investment
China FTA Taskforce
Department of Foreign Affairs and Trade
R G Casey Building, Barton ACT 0221
www.dfat.gov.au
Telephone: 02-62611111