China to drop coal tariff in FTA

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ScreenHunter_4595 Oct. 21 14.58

By Leith van Onselen

The Australian is reporting that China will exclude Australia from its proposed 3% tariff on coking coal and 6% tariff on thermal coal if a free trade agreement (FTA) between the two countries is concluded:

“We want to see our way through it and the answer that we agreed upon was the free trade agreement,” Mr Hockey told The Australian.

“Once we get a free trade agreement it will be abolished.

“The quicker we get an FTA the quicker the tariff will go.”

Prime Minister Tony Abbott is hopeful of securing a free trade agreement with China by the time of the G20 summit in November.

But Mr Abbott sounded a warning to government MPs not to jeopardise the trade talks as he responded to a coalition party room meeting question about foreign investment in agriculture and real estate…

Mr Abbott added he was conscious of the potential impact of foreign investment in driving up the cost of housing in capital cities.

However he said no one should do anything to jeopardise a good outcome from the FTA.

You’ve gotta commend the negotiating nous of the Chinese. They only announced the coal tariff a fortnight ago and are already using its potential abolition as a negotiating coin to extract concessions from Australia in the FTA.

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Judging by the comments from Abbott above, it also appears that the Prime Minister opposes reforming the regime governing foreign investment into Australian residential property, despite its obvious failure and growing disquiet in the community.

Yet another sell-out from this Coalition Government.

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.