What China wants in a ‘free trade’ agreement

The Sydney “conference(conference program—pdf file about 200k)”:http://www.apec.org.au/ChinaFTAProgram.pdf on the proposed Free Trade Agreement with China heard a keynote speech tonight from the former negotiator of China’s accession to the WTO, Long Yongtu, in which he set out, for the first time, some of China’s ideas on the content of the proposed ‘free trade’ agreement. Long, who is now Secretary General of the Baoa Foundation—the ‘Asian Davos‘—delivered a speech that was mostly public relations and flattery (‘Australians are our teachers’ on the subject of trade agreements). But the last part of his speech developed four points that, taken together, tell us for the first time what limits China may have in mind to the concept of ‘free trade’. This is important news. Because one of the most puzzling questions about the proposed FTA between Australia and China is the extent to which China would really be prepared to allow a trade agreement with a minor trading partner (12th largest destination for their exports) to drive changes in important commercial policies, going beyond even the still-undigested obligations that they accepted when joining WTO. Long’s four points were: # We must make a good job of the public diplomacy associated with the Agreement. We must develop a broad consensus on the commitment to more open markets
# We must be ‘sensitive’ to the concerns of particular sectors on both sides. Long mentioned agriculture as a sector with particular sensitivity in China (no surprise there). On Australia’s side, several manufacturing industries such as steel, plastics and chemicals seem to be building a case for ‘sensitive’ treatment.
# We must be ‘sensitive to the concerns of other WTO members’. This was left unexplained and is the most obscure of Long’s four points. But it seems to mean that China will not, in the end, offer any preferential concessions to Australia that seem to jeopardise important US or Japanese (?) interests
# We must take account of the strategic priorities of both sides (i.e. Chinese policy on Taiwan remains a ‘given’ in any agreement). By far the most significant of these is the second condition. It seems to signal a need for Chinese safeguard measures and an offer (perhaps?) to allow Australia to seek safeguards for it’s own ‘sensitive’ sectors.  Reminiscent of the recent agreement with Thailand in which Australian demand for safeguards on textile imports was the justification for Thai safeguards on imports of Australian dairy products.

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