Grain Of Hope In China Trade
The Age
Wednesday April 9, 2008
AUSTRALIA'S long-suffering trade negotiators have received rare encouragement from key Chinese officials, as rising world grain prices soothe the sensitivities of Chinese farmers.
Minister for Agriculture Tony Burke said he was surprised by China's "optimism" for a bilateral trade agreement and a resolution of the Doha Round of World Trade Organisation talks."There seemed to be a willingness to unlock what had been frozen negotiations," Mr Burke said, after meeting with China's Commerce Minister, Chen Deming, and Agriculture Minister Sun Zhengcai in Beijing. Negotiations for an Australia-China preferential trade agreement have gone nowhere since they began three years ago, while China has taken a back-seat in multinational trade talks since acceding to the WTO in 2001. Peter Gallagher, at trade consultancy Inquit, said: "It's a bit of a turnaround because the Chinese had not previously given us any indication of a willingness to negotiate on agriculture."This week, China signed its first bilateral trade agreement with a developed country, New Zealand. Professor Han Feng, an Australia expert at the Chinese Academy of Social Sciences, said Prime Minister Kevin Rudd's meetings with Premier Wen Jiabao and President Hu Jintao later this week could provide a fresh starting point for trade talks because they were all "new-generation leaders". But he warned there was no possibility of reaching an early breakthrough on the key sectors of Chinese agriculture and services. Chinese officials want to protect peasants from Australian wheat, in particular, and insulate China's embryonic financial services companies from international competition. And they would be loathe to give concessions to Australia that were not extended to powerful American and European industries. But skyrocketing grain prices have recently prompted Chinese policymakers to shift focus from protecting grain producers to protecting consumers - resulting in a contradictory mix of import and export barriers. "If you're ever going to do it (remove Chinese import restrictions), now is the time, because farmers are cash-rich," said Mark Thirlwell, head of international economics at the Lowy Institute. Mr Burke also said he received "extremely positive" Chinese support for negotiating a memorandum of understanding to combat illegal logging.China is by far the most important buyer of illegal logs from Papua New Guinea, Indonesia and elsewhere in the region, more than half of which are exported as manufactured products.KEY POINTS ? Rising grain prices and China's food shortage combine to create trade deal optimism.? PM's visit this week could provide a fresh starting point for trade talks.
© 2008 The Age