Australia, China deepen ties with landmark free trade deal

Tuesday, 18 November 2014 00:03 - - {{hitsCtrl.values.hits}}

CANBERRA (Reuters): China and Australia on Monday sealed a landmark free trade agreement more than a decade in the making, significantly expanding ties between the world’s second largest economy and one of Washington’s closest allies in Asia.

The deal, which Australia called the best ever between Beijing and a Western country, will open up Chinese markets to Australian farm exporters and the services sector while easing curbs on Chinese investment in resource-rich Australia. Australian Prime Minister Tony Abbott and Chinese President Xi Jinping signed a memorandum of understanding clinching the agreement during a ceremony in parliament in Canberra. “This has been a 10-year journey, but we have finally made it,” Abbott said. Xi praised the deal in an address to parliament, pledging to deepen cooperation with Australia while reaffirming China’s willingness to resolve territorial disputes with its neighbors through diplomatic means. “As long as we have our long-term and the larger interests in mind, increase positive factors and remove obstacles we will certainly forge a closer and more comprehensive strategic partnership between us,” he said. China is already Australia’s top trading partner, with two-way trade of around A$150 billion ($130 billion) in 2013. On Monday they witnessed 14 commercial agreements between companies worth potentially more than A$20 billion ($17.56 billion). The leaders also pledged to work jointly to combat climate change by sharing technology aimed at improving the efficiency of coal usage. Australia needs China’s help to transition from a reliance on exports of minerals such as coal and iron ore to expanding its food and agricultural exports to a growing Asian middle class, moving from a “mining boom” to a “dining boom”. “[The agreement] should help to support Australia’s great rebalancing act, from mining investment led growth towards the non-mining sectors of the economy,” HSBC economist Paul Bloxham said in a note. Once the agreement is fully implemented, 95% of all its exports will enjoy duty free entry into China, Australia said. 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 currently restrict competitors from New Zealand.