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 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 percent of all its
exports will enjoy duty free entry into China, Australia said.
The agreement comes a day after U.S. President Barack Obama wrapped
up a week-long tour through Asia, during which he sought to reassure
Asia-Pacific allies wary over Washington's commitment towards its
strategic realignment to the region.
Washington and Beijing have competing visions for free trade in the
Asia-Pacific region, with the U.S. pushing its 12-country
Trans-Pacific Partnership (TPP) deal, which excludes China, and
China mooting a Free Trade Area of the Asia-Pacific (FTAAP)
framework.
Washington was unable to secure a breakthrough on TPP during the
trip.
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DAIRY, WINE, MINERALS
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.
"Australia has been marginalized from being a major exporter to
China in the last few years, one of the reasons being that milk
production (there) has been going down over the last decade," said
Sandy Chen, dairy analyst at Rabobank in China.
Wine makers, currently selling more than A$200 million worth of
goods to China each year, will see tariffs eliminated over four
years, while a 3 percent coking coal tariff will be removed
immediately and a 6 percent tariff on thermal coal within two years.
Dairy companies, including Canada’s Saputo Inc, which owns
Warrnambool Cheese and Butter Factory Company Holdings Ltd, and Bega
Cheese Ltd are among likely leading beneficiaries of the deal.
Health and aged care providers, such as Japara Healthcare and
private hospital operator Healthscope will get a jump on providers
from Japan, the U.S. and Europe, while financial services companies
ANZ Bank and IAG will get a boost from preferential access.
Fortescue Metals Chairman Andrew Forrest said the agreement would
become the most significant trade deal Australia has ever done. "We
can offer Chinese consumers the highest quality produce and Chinese
consumers can be confident in the reliability of supply and food
safety," he said.
The agreement caps a string of breakthrough deals for Xi. Last week
he jointly announced with Obama a groundbreaking plan to cap and
eventually roll back carbon emissions, as well as reaching a
"substantial conclusion" of a free trade deal with South Korea.
The deal also caps a year of trade achievements for Abbott,
following free trade agreements with Japan and South Korea.
(Additional reporting by Sonali Paul in MELBOURNE, Jane Wardell and
Lincoln Feast in SYDNEY and Fayen Wong in BEIJING; Editing by Nick
Macfie and Jeremy Laurence)
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