Dr Zhang on Friday met a delegation from the Australian
telecommunications industry, "who asked us to allow Australian
companies to compete with Chinese service suppliers".
"But in our WTO accession negotiations, telecommunications and
financial services were very sensitive areas, related to security.
We have a fragile financial system in China. So we made some
reservations on our liberalisation schedule," Dr Zhang said.
In an FTA, though, "we have no other option but to discuss further
liberalising these sectors, as well as legal services and tourism
and education. There are chances for bilateral co-operation, but we
shall have to be cautious.
"Our services sector is quite vulnerable. It is only 40 per cent of
our economy, we are far behind other developing economies in this
area, we have to catch up. But to my understanding, opening our
industry is a good approach to doing so. Without liberalisation, we
can't develop our services by themselves. The problem is, to what
extent, by how many steps can we reach that goal."
He says that at Friday's talks the leader of the Chinese
telecommunications delegation, a vice-minister, said that if China
opened its market completely "Australia will kill our industry".
The Australian counterpart responded, "We are too small to do
that". Dr Zhang says "that's a typical dialogue" in this FTA
round.
Talks began a year ago, but the first four rounds - until last week
- comprised an exchange of information rather than negotiations.
Last week, Australia led the shaping of these future talks by
tabling the 15 chapters likely to be included in the final
agreement - though without many of the crucial figures, which will
be the subject of intense discussion through this year and
next.
Australian chief negotiator Ric Wells led a delegation of 57 -
which was "huge", says Dr Zhang, whose own team comprised 52. Dr
Zhang describes Mr Wells as "a friend; we share a common goal" in
trade liberalisation. They had both been heavily involved in
China's accession to the WTO in Geneva.
The Australian team was pleased with the intensity of the
engagement of their Chinese counterparts - who are involved on a
broad front in trade negotiations, but have devoted substantial
effort to consult with the wide number of other Chinese government
agencies that need to sign off on any concessions to Australia. On
intellectual property issues alone, 30 agencies are involved.
Dr Zhang says that he has held a meeting in Sydney with Chinese
companies working in Australia. "We didn't get a lot of complaints.
There were some difficulties in doing business, such as in getting
visas, but I don't think that comes under my responsibility.
"We are concerned about barriers and regulations in Australia that
discriminate against Chinese investment, and until now we haven't
come across many. Australia has its own labour standard laws and so
on, and they are legitimate. Foreign investors have to abide by the
local laws and regulations, if they apply to all investors
including locals."
Among the areas of the agreement on which the Chinese negotiators
will now work, is that dealing with the movement of people in
services. China wants access for Chinese stevedores in Australia,
to load and unload ships with goods owned or part owned by Chinese
firms; and it wants Chinese construction firms to be free to use
Chinese workers in Australia. The resulting debate will hinge in
part on whether such workers qualify as skilled or not.
In the past, China has been very reluctant to concede that some
areas such as government procurement and investment would be
covered in an FTA. But last week, they agreed in principle to
include them.
Dr Zhang says that while multinational agreements are "fundamental
for the trading system, maybe they go for a whole year without any
movement". Progress, though, can proceed bilaterally.
China will soon start negotiating to join the WTO's government
procurement agreement - which would give other countries within
that agreement, including the US, better access to China.
Australia, which wishes to preserve its more flexible approach, is
not a member.
But now China has said it is willing to consider offering a
separate deal to Australia. Dr Zhang says: "We understand
Australia's concern and will discuss it."
On investment, which is not covered by the WTO, China's central
Government is anxious about making commitments that may be
difficult to implement, especially given the diverse conditions in
far-flung provinces.
But trade and investment are rapidly becoming inseparable, as
traders seek to move downstream and to build a bigger presence in
important export markets such as China. While China encourages
manufacturing investment, though, it retains elaborate restrictions
on services - such as requirements to partner a Chinese firm,
limits on foreign staff, and stipulated amounts to invest.
Australia wants "national treatment" - the same treatment as local
companies - for its firms operating in China. China is willing to
concede something similar to businesses once they are already on
the ground, but wants to keep some of those barriers that make it
hard for foreign firms, especially in services, to get in.
