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China FTA 'could spell disaster' without safeguards, Lib senator warns

12 November, 2014

Ahead of the imminent signing of a free trade deal with Australia's biggest trading partner, due to take place at this weekend's G20 Summit, senior Liberal senator Bill Heffernan has warned things could turn against us if appropriate safeguards aren't included.

Speaking to reporters recently, Heffernan said there's the possibility China may cut its tariffs, and then manipulate its currency to stay in front.

Currency's 'non-market' status

"How do you really have a trade agreement with a country that won't put their currency on the market? I mean we should learn from our free trade agreement with the US," he said.

"When we signed that agreement we were at 65 cents, when we enacted it the following February we were at 67 cents to the US.

"We did away with 5 per cent and 15 per cent tariffs and within a few years we found ourselves at a huge trade disadvantage because we had a 45 per cent currency tariff against us because we went parity with the US and above parity at one stage."

Heffernan said the Chinese currency's 'non-market' status could present difficulties during tough economic times.

"It's a non-market currency which makes it very difficult for us [to] manage good times, bad times, high interest rates, low interest rates," he said.

"In code, it really means we can't win until the currency comes on the market."

Need to enhance trade

However PM Tony Abbott said he was confident the FTA's conditions would both please and be of benefit to both nations, although there were a few details still subject to change.

"Thanks to a lot of focus from Australia and from China over the last 12 months, I think it is very much on track for success in the next few days," Prime Minister Tony Abbott told reporters at the APEC summit in Beijing on Monday.

Similarly, federal Agriculture Minister Barnaby Joyce played down the concerns of his party colleague, asserting the necessity for Australia to increase trade with China so that national debt could be paid off.

"If we don't do a deal with China, if we don't trade with what is now our major trading partner, then our capacity to pay our bills and re-float our economy after the disastrous episode of the previous government, is going to be impinged," he said.

"We have to make sure that our soft commodities – such as wheat, such as beef, such as cotton, such as wool – start flowing in a more formidable form."

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peter | Wednesday, November 12, 2014, 10:16 PM
Wonder what is not being told about the negatives to Australia. What are we giving away in this FTA. Where does one get to see what is really in this agreement. Would it be asking too much for our government to be open about this before they sign it "for our greater good"