'We wanted to change China with FTA': former ambassador

By David Donaldson

November 11, 2014

Geoff Raby
Geoff Raby

Official negotiations on the China-Australia free trade agreement, widely reported to be near completion, have stretched out for nearly a decade now. But little progress was made until the Abbott government took up the reins, according to a former ambassador to China.

Geoff Raby, an economist and career diplomat, was Australia’s representative in the lucrative Middle Kingdom between 2007 and 2011. While talks with China started officially in 2005 under the Howard government, pre-negotiation negotiations began two years before that. Indeed, he told The Mandarin the whole thing was his idea.

“I actually started the negotiations back in 2003,” he said. “It was my idea that I put to the government of the time. [Foreign minister Alexander] Downer and [prime minister John] Howard eventually took it up and went with it. So I was heavily involved in getting the whole thing started from scratch.”

But thanks to an “offensive” approach that pushed broader, systemic change within China, Australia gained little headway for several years.

“When we started, because of the political controversy around the launch of the negotiations, plus the fact we’d just done a very good bilateral free trade agreement with the United States, we set ourselves a very high bar. We wanted to have a comprehensive, fully liberalising, World Trade Organisation-consistent FTA.

“In fact, we really wanted to change China through the FTA negotiation by driving the process of deeper reform in order to improve our market access.”

But after realising other countries were beating out Australia and profiting handsomely, thinking within the Department of Foreign Affairs and Trade began to change.

“We began with an agenda that was very ambitious. But our competitors like New Zealand and Chile went to China with a very narrow list of objectives and issues they wanted to realise, and China was much more comfortable with that approach. They found our approach very difficult to understand, quite threatening. They really were quite reluctant at times to engage.

“They kept asking us to be more specific and provide a narrow set of negotiation objectives. Once New Zealand and Chile concluded their negotiations — over five years ago now — the settings changed and we moved from an offensive agenda to a defensive agenda.”

That’s the situation that Andrew Robb walked into as the new Trade Minister last year, on the election of Tony Abbott as Prime Minister. The new government took up this narrower, “defensive” approach.

“Nothing really happened until Abbott was elected and said he wanted to do this in 12 months,” he said. “Robb, in a very pragmatic way and I think quite correctly, has gone about trying to conclude this as a first step, if you like, and then we can see what we can build up later.”

Raby rejects the suggestion that China has drawn out negotiations to punish Australia for perceived slights made by former PM Kevin Rudd, including giving a lecture at Peking University on human rights. Raby himself has been critical of Rudd’s approach to China in the past.

“… they were still stuck with the script that the bureaucrats had crafted at the beginning of the negotiation.”

“I think it just never was a big enough priority for the Rudd government and they were still stuck with the script that the bureaucrats had crafted at the beginning of the negotiation. It was just not going to work as the basis for a negotiation with China,” he said.

“It’s not about the broader political and strategic issues. Obviously you’ve got to have a good bilateral relationship as a good foundation of trust to do these things, but the reality is that it’s a commercial negotiation effectively, and there are a whole lot of interests at play.”

Although Raby helped get talks up and running initially, work had stalled by the time he was in charge of the Beijing embassy. “As ambassador, by the time I took up the job in 2007, the negotiations weren’t really going anywhere.” he recalled.

“The direct engagement from me on the ground in Beijing was fairly limited, other than obviously advocating on behalf of the negotiations, spending a lot of time in areas where we knew we were being blocked, such as in agriculture. Trying to advocate and explain what it was that we were trying to do and not do. And also to help Canberra understand what the sticking points were on China’s side.”

Key to managing such a complex undertaking is effective stakeholder and interdepartmental management, he says.

But the fact it took two years to even agree to begin negotiations demonstrates how difficult such processes can be.

“Formal negotiations began in 2005, but it took us over two years of negotiating with the Chinese just so we could get to that point where we could start. There was a very difficult negotiation leading into that, particularly because China had a very strong demand that they wanted us to accord them market economy status,” Raby said.

“This is a technical issue inside the WTO with respect to anti-dumping agreements in the WTO, something China felt strongly about and believed the agreements were discriminatory against it. Unfortunately, the name created a sense that somehow we were making a philosophical judgement on whether China was a market or near-market economy, which was not the point at all. In fact, the way we treated China in our own anti-dumping legislation, China was in effect treated as if it were a market economy, we just hadn’t classified it as a market economy.

“So that led to a lot of heated public discussion. There was a great deal of criticism from the opposition who claimed that by giving China market economy status we were using up our best negotiating coin rather than saving it for the actual negotiations. But the reality is there would not have been a negotiation had we not given them market economy status, so therefore the coin had no value outside of negotiations. And that wasn’t going to happen.

“So that was a very complicated, fraught process and there was a lot of public consultation and discussion around the country on that one.”

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7 years ago

I stopped reading as soon as Rabi says “we’d just done a very good bilateral free trade agreement with the United States”… that BTA was a shocker

Cardinal fang
Cardinal fang
7 years ago
Reply to  James


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