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Australia Pushes for Trade Deals with Visiting Chinese President - 2003-10-23

Chinese President Hu Jintao has met with Australian businessmen on the second day of his state visit to Australia.

As Australian Prime Minister John Howard plays host to Chinese President Hu Jintao in Canberra, his government hopes that this visit will lead to a trade agreement with the Asian economic giant.

China is Australia's third biggest trading partner and a major buyer of its ore and mineral products.

After a one hour meeting with Mr. Hu, Warwick Smith, chairman of the Australia-China Business Council, emerged optimistic.

"I predict that within five years China will be the largest trading partner in Australia, and it would be made up of minerals, tourism, education so it would be quite diverse," said Mr. Smith. "That's certainly happening and it's happening at a very rapid rate."

Australia push for closer economic partnership with China comes at a time when it faces the threat of exclusion from regional trading arrangements emerging in East Asia.

The summit of the Association of Southeast Asian Nations earlier this month highlighted a revitalized push toward economic and political integration in East Asia.

ASEAN wants to establish a European-style common market by 2020. ASEAN and China have already agreed to create the world's largest free trade zone by 2015. And, under the ASEAN plus Three framework with China, Japan and South Korea, East Asia is closing ranks to consolidate its economic weight in the international arena.

Mark Beeson, professor at the University of Queensland in Australia and an expert in regionalism, says an exclusive economic bloc would have a negative impact on Australia's economic and political interests in the region.

"If some form of Asian common market did have external tariff barriers that excluded other countries, that would be a big problem for Australia because Australia's major growth area in exports at the moment is manufactured goods and those kinds of products could be the victims of any kind of emerging tariff barriers that would be put up around the common market in Asia…," he explained. "If there are a number of key bilateral deals between China and ASEAN, Japan and ASEAN, they may have the effect of making it more difficult for Australia to become economically integrated and to exercise a political influence in the region as well."

With Asia as its largest export market, Australia has used bilateral trade agreements to circumvent possible exclusion from the growing regional trading areas.

Free trade deals have been reached with Thailand and Singapore and negotiations for greater access to the Chinese and Japanese markets are under way.

But, Australia's attempts to formally integrate with East Asia as a whole have been rebuffed repeatedly for cultural and political reasons.

At the recent Asia-Pacific Economic Forum, Singapore's leader said Australia can only be considered Asian if the majority of its population is non-white. Malaysia criticized Australia for its "deputy sheriff" role in the region.

Despite these setbacks, some analysts say Asia could greatly benefit from embracing Australia as a trading partner.

Bob Broadfoot, managing director of the Hong Kong-based Political and Economic Risk Consultancy, says Australia could provide the raw materials needed for industry in a fast developing nation like China.

"Australia looks as a preferred trading partner because it's a lot more stable and it's got the commodities," he said.

Experts say a formal common market in East Asia is ambitious because it has a poor record on regionalism.

The ASEAN Free Trade Area, which was supposed to be completed this year, has been hampered by unwillingness of some member-nations to lower tariffs in industries such as agriculture and automobiles.

As for Canberra, it is hopeful that Australian hospitality to the Chinese leadership would bring with it opportunities it has long been denied of elsewhere in Asia.