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Howard Likely to Grant MES to China

Australian Prime Minister John Howard is likely to announce that Australia will grant China "market economy status" and open talks on a free-trade pact between the two countries when visiting China today, according to trade experts and political analysts.

If so, Australia, one year after New Zealand, will be the second developed country to grant China market economy status.

Chinese officials did not confirm or deny that Howard would formally announce China's market status and a start to formal negotiations on a free-trade agreement today when meeting Chinese President Hu Jintao and Premier Wen Jiabao, but hinted some breakthroughs would be made by saying "the visit will win remarkable progress."

China has told Australia that after its acknowledgement of China's market economy status and if the negotiations (of the free trade pact) start, Beijing will put all economic issues, including agricultural and service sectors, on the table, according to a Chinese trade official who declined to be identified since the announcement had not been made formally.

"If we do concede market economy status it will be in return for everything being on the table and also a very comprehensive agreement at the end," Howard told Australia's ABC television last week.

On Saturday, Howard is expected to deliver the keynote address at the Boao Forum, an annual meeting of Asian business and political leaders on the southern island of Hainan.

Australian Trade Minister Mark Vaile, who visited China last month, said the two sides had made remarkable progress, paving the way for free trade negotiations to continue. He said: "The time is right for Australia to move into free-trade negotiations with China," according to the website of the Department of Foreign Affairs and Trade of Australia.

Analysts believed such a pact reflects the genuine wishes of both countries to bolster bilateral economic and trade links.

"Sino-Australian ties will be more concrete and diversified," said Zhang Yijun, former director of the department of North American and Oceania Affairs of the Foreign Ministry. He described it a "new phase" in bilateral relations and paves the way to a better international trading status for China.

"It would be very significant both economically and politically," he said.

Forging a free-trade agreement between the two countries will be complex, and granting China market status will not dramatically alter China's trade flow to Australia, an analyst said.

A series of complicated issues need time to discuss, but it is becoming a trend that global players have more bilateral and multilateral trade negotiations aimed at opening up world trade, Zhang said.

For China, the agricultural industry, which is far weaker than Australia's, is one of the most sensitive issue since more than 740 million farmers will be affected by a further opening of the sector.

"But the two economies are very complementary which is a base for long-term, mutually-beneficial economic ties," he said.

In 2004, Australia's exports to China grew by 21 percent to US$10 billion.

(China Daily April 18, 2005)

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