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Australian government pushes free trade with Asia Pacific
Australia's new Government is making trade a key international priority, promising to conclude free trade agreements with China, Japan and South Korea.

Australia's new Government is making trade a key international priority, promising to conclude free trade agreements with China, Japan and South Korea.

Trade and Investment Minister Andrew Robb has already been in China.

He will return next month, and also visit Japan and South Korea to try to kickstart long-stalled FTA negotiations.

Geoff Raby was Australia's ambassador to China from 2007 to 2011, and spoke to Jim Middleton about the negotiations.
JIM MIDDLETON, PRESENTER: Geoff Raby, welcome to the program.


JIM MIDDLETON: Tony Abbott says he will be disappointed if a free trade agreement with China is not concluded within 12 months. Is that achievable? Is he being realistic?

GEOFF RABY: I think it's achievable. I think he's being realistic. What we need to do, though, is to change our negotiating approach. We have to understand when we began with China we were the first developed country that China agreed to commence FTA negotiations with. We had an offensive agenda, a broad agenda, many things we wanted to try to achieve, but the game's changed for us now. Many of our competitors, New Zealand, Chile and others, have FTAs, and we are moving more into a defensive position where we really need to think about defending our market share in the Chinese economy.

JIM MIDDLETON: What are the implications then of that change in position for Australia in terms of what an FTA can be expected to achieve?

GEOFF RABY: Well, I think we'll have a narrower but hopefully a more achievable and realistic list of issues. Where we are under most competitive pressure is in areas like sheep meat, wine, dairy, wool - a range of agricultural products which we traditionally have been very competitive suppliers in, but now we're disadvantaged by the tariff concessions that our competitors have been able to achieve.

JIM MIDDLETON: Why is agriculture such a sticking point when an increasingly wealthy and populous China has such demand for such products?

GEOFF RABY: It's a good point and it's a bit disappointing that they are. But China like many other countries in north Asia: Japan, South Korea, or even wealthy countries in Europe, seek to protect their agricultural sector. They justify it on grounds of security or whatever. And we have to argue the case that it's better for their consumers, it's better for their welfare if they open those markets and have more competitive foreign sources of supply.

JIM MIDDLETON: When you say that Australia needs to have a more realistic agenda, does that mean that the previous Australian government's approach was unrealistic; that the point made by the new Government, effectively that the Rudd and Gillard administrations dropped the ball on this FTA, that that has some merit?

GEOFF RABY: Not so much dropped the ball, but I think our negotiators and the political leaders in Australia got caught very much I think in tram tracks of the negotiations. Positions which some years ago were reasonable for us to pursue have changed as the dynamics of the FTAs that China has negotiated have changed, and that other competitors to Australia have moved into the market and now have a competitive advantage over us.

JIM MIDDLETON: Just how much of a problem is the Abbott Government's policy of tougher scrutiny of foreign investment proposals, and the new Prime Minister's inclination, as expressed in a speech in Beijing last year, not to support investment proposals from Chinese state-owned enterprises.

GEOFF RABY: We haven't actually seen what their policies are in this area. There has been, as you said, a speech by the Prime Minister in Beijing last year, which I believe was widely misinterpreted and misread. He basically asked a rhetorical question about state-owned enterprises, he didn't put a policy position forward. We're still waiting to see what the policy might be. The reality is investment will have to be part of any FTA. That's inevitable. We are a big capital importer. We should welcome that, to be frank. And we ought to think about the investment issue not as a concession, but as very valuable negotiating coin that we have. And if the Prime Minister thinks of it in these terms - that he can use the investment issue to gain greater concessions from the Chinese in areas of real commercial benefit to Australia.

JIM MIDDLETON: How hard do you think the Chinese will push on this issue? The free trade agreement; Australia's FTA with the United States, for example, has an investment threshold of $1 billion. This Government's proposing that for land acquisition it is should be as low as $15 million. Will the Chinese wear such a restrictive regime?

GEOFF RABY: Well, there won't an FTA without something on foreign investment. It is the most valuable element in the FTA that we have to trade with the Chinese. What that looks like will depend on the quality of the package that's finally concluded. And that depends on what the Chinese themselves are prepared to do in terms of market access for key industries, key export areas from Australia. There's many ways to cut this issue. But the threshold is an issue that the Chinese have put directly on the table. They've looked at the threshold that the United States has, and understandably they've made that as an ambit claim. This will be part of the dynamic of the negotiation, and we can address it in a number of different ways and it can be different from different sectors. So there's not a one-size-fits-all and there's not a single answer to what it might look but what the Chinese need to understand, and I'm sure they do, is the value of the investment outcome for them will be linked directly to the value of the market access package for Australia.

JIM MIDDLETON: Geoff Raby thanks very much.

GEOFF RABY: My pleasure Jim. Thank you.
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