There’s confidence in the state’s farm sector that Prime Minister John Howard’s trip to China later this month will further moves towards the establishment of a free trade agreement between the two countries.
There’s confidence in the state’s farm sector that Prime Minister John Howard’s trip to China later this month will further moves towards the establishment of a free trade agreement between the two countries.
The prospect of an FTA was a major issue at the WA Farmers Federation’s (WAFarmers) three-day conference last week.
Director of food, trade and quarantine at the Federal Office of Trade Negotiations, Andrew Martin, gave a breakfast gathering of about 100 farmers a snapshot of China’s economy, highlighting its rapid growth and the impact of this on its import and export markets.
“China’s economic growth has averaged 8.2 per cent over the past decade and reached 9.5 per cent in 2004,” Mr Martin said.
“Its rapid growth is absorbing imports at an unprecedented rate. Imports grew by 40 per cent in 2003, exceeding Japan’s imports for the first time in recent history.”
Mr Martin said that, given the regional and global impact of China’s emergence, strengthening the trade and economic relationship with China was a major priority for the Federal Government.
“Thankfully Australia is well placed to benefit from China’s rapid economic expansion, a point I don’t need to emphasise to the people who live in Western Australia,” he said.
However, WA Farmers Federation president Trevor De Landgrafft said while WA’s agricultural experience with China had been “reasonable” and an FTA would be a positive step, he did not want to see it affect the Doha round of trade negotiations.
Mr De Landgrafft said WA and Australia had more to gain through world agreements rather than bilateral ones.
“We want them to get it right and take their time with the FTA rather than try and rush it through,” he said.
Mr Martin said China was already Australia’s second largest merchandise export market, still behind Japan but now just ahead of the US.
“And while export growth has been driven by demand for resources and energy, the prospects are certainly there for agricultural producers as well,” he said.
“With our comparative advantage in broadacre production there is significant potential for Australia to increase agricultural exports to China in products such as wheat, barley, wool, beef, sheep meat, dairy cattle, as well as fishery products, both wild catch and farmed, and forestry.
“There will also be opportunities for Australian wine.”
Mr Martin said a significant factor in the outcome of any trade negotiations with China was the sheer size of its agricultural sector.
Up to 800 million people live in rural areas in China and 50 per cent of the labour force is engaged in agriculture.
“Agriculture contributes 14.5 per cent to China’s GDP compared with 3 per cent in Australia and around 9 per cent in WA,” Mr Martin said.
“While China has seen enormous growth in its agricultural output, particularly in the last 20 years, its supply of many agricultural and food products is still unlikely to keep pace with demand, requiring higher levels of imports for some time to come.”
While not pre-empting the outcome of future bilateral trade talks, Agriculture Minister Kim Chance said the Chinese would take note of recent trade developments involving Australia.
“China would have looked positively at the fact that Australia is the first big Western country (outside North America) to form an FTA with America,” he said.
“The Chinese are very interested in security of supply, especially food. This is being seen across the whole trade sector.”
Mr Chance said the demand for WA’s grain was unlikely to decrease for years because land devoted to this type of farming in China was being used for other purposes.
“I think most WA farmers think the sooner the better for an FTA with China.”
And while leaving no doubt that the challenges of striking an FTA with China would be significant, Mr Martin said the opportunities would be tremendous.
