AUSTRALIA has threatened to walk away from a free trade deal with China unless Beijing agrees to get rid of tariff barriers on agricultural products.
Trade Minister Simon Crean yesterday warned that Australia would demand at least the same treatment on agriculture as Beijing has given New Zealand under a separate deal.
"I'm not going to conclude a free trade agreement for the sake of it," Mr Crean told a Melbourne business forum.
"As difficult as agriculture is on their side, there is no way we will settle for less of an outcome on agriculture than they gave New Zealand," he said.
"If they are not prepared to embrace that, forget about it — we'll go off and concentrate more of our effort on Korea and someone else."
Australia and South Korea agreed to open free trade talks earlier this year during the visit of President Lee Myung-bak.
Talks with China began in 2005 under the Howard Government. After 13 rounds of negotiations they remain deadlocked over special access to Australian markets by China's state-owned firms and the differences over tariffs.
China is Australia's second largest export market, with sales of more than $30 billion in goods and services last financial year.
The Rudd Government has pursued close ties with China, arguing on the world stage that it should have greater greater power via voting rights within the International Monetary Fund.
Opposition Leader Malcolm Turnbull last month criticised Mr Rudd for spending "most of his time talking about China" on his recent trip to the US, reminding him that he was not "a roving ambassador for the People's Republic of China".
Mr Crean yesterday denied the free trade talks were close to collapse. "I don't think we're at a breakdown, but you can't just negotiate with yourself," he told The Age.
He said wrapping up a free trade deal with China would send an important signal in support of open markets — which Mr Rudd has insisted on throughout the global financial crisis.
Mr Crean said the purpose of his visit to China late last month was to see if the political will exists to conclude a deal. "I've come away convinced that it does," he said.
New Zealand struck a deal with China last April to eliminate tariffs on 96 per cent of its exports, including significantly lower barriers to dairy products, fish and fruit.
Mr Crean also said China must also allow better access for the Australian services sector.
He held out the prospect of a new framework to govern investment in order "to overcome what we are experiencing at the moment, this xenophobic reaction, by virtue of the magnitude of the investment, not the principle."
Mr Crean was referring to $30 billion of Chinese investment in Australian firms recently approved, which could be doubled if the Chinalco-Rio Tinto deal goes ahead. That deal has set off a sharp debate over fears that Chinese state-owned firms are buying up strategic interests in Australia.
Until last year Australian companies had invested more in China than Chinese firms had in Australia, Mr Crean said.
Asked if he saw improvement in the Chinese economy after recent figures indicated a slight lift, Mr Crean said he had no doubt Beijing was working hard to stop growth from slipping below 8 per cent and was "optimistic" about its role in driving global recovery.
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