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Chinese investors could have more access to Australia Chinese investors could have more access to Australia
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The government has left the door open to granting China freer access to the Australian market, after Labor proposed raising to $1bn the threshold for investment requiring approval from the Foreign Investment Review Board. Labor says China should get the same foreign investment deal as the US achieved under its free trade agreement with Australia.
The threshold would apply only to non-sensitive sectors of the economy. The government has been planning to reduce the threshold for agricultural land from $248m to $15m, and to publish a list of land and agribusiness holdings in Australia. And its trade spokeswoman, Penny Wong, says agriculture should not be viewed a special case.
Labor’s trade and investment spokeswoman, Penny Wong, indicated the $1bn threshold could be extended to other countries as she prepared to outline the policy in a speech to the Economic and Social Outlook Conference in Melbourne on Thursday afternoon. The Abbott government has signalled Australia will offer China the same preferential deal on foreign investment by private firms as it has granted the US, Japan and South Korea in bilateral free trade pacts.
Australia is negotiating a free trade agreement (FTA) with China. The prime minister, Tony Abbott, said he welcomed Labor’s new approach, and noted higher investment thresholds applied to countries with which an FTA had been finalised. Those deals create a new investment threshold of $1.08bn (up from $248m) before Foreign Investment Review Board (Firb) scrutiny is triggered.
Wong said on Thursday Labor was happy to “support moves to put China, our biggest trading partner, on the same footing as the United States when it comes to investing in Australia”.
“That means a threshold of $1.078bn for Foreign Investment Review Board screening of proposed investments in non-sensitive sectors,” she said.
But Wong signalled Labor would continue to be cautious about investment from state-owned enterprises, a key issue of contention in the Australia/China FTA.
“Lower thresholds should continue to apply for investments in sensitive sectors or by state-owned enterprises, where issues of national interest can arise,” she said.
The Abbott government has indicated it will look to strike a special deal to approve more investment in Australia by Chinese state-owned enterprises if Beijing agrees to sign up to a broad-ranging free trade pact later this year.
Wong indicated Labor did not see agriculture as a special case when it came to foreign investment.
“Placing hurdles in the way of foreign investment in our primary production industries will only jeopardise their growth,” she said. “That is why Chinese investment in agriculture should be treated in the same way as investment in other non-sensitive sectors.”
The Nationals insist that lower foreign investment thresholds apply to all foreign investment in Australian farmland and agribusinesses in free trade pacts.
Recent free trade agreements with South Korea and Japan contain provisions to screen proposals for private investment in agricultural land at $15m, and agribusinesses at $53m – a fraction of the $1bn thresholds applying to non-sensitive sectors.
Wong’s speech indicates Labor rejects this position.
“If we are serious about significantly expanding our food exports to Asia, we must front up to the reality and necessity of foreign investment in our agricultural sector,” she said.
“It is inconceivable that we will be able to scale up production to fully tap into the growing consumer markets of Asia without foreign investment.”
She also suggested the $1bn-plus threshold for Firb screening offered to investors from the United States, Korea, Japan and New Zealand might be extended to all Australia’s trading partners.
Wong touted the benefits of free trade in reducing poverty in the region and said Australia should use its chairmanship of November’s G20 meeting to revive the World Trade Organisation (WTO) Doha round talks on multilateral trade liberalisation.
She said since Australia was negotiating a Trans-Pacific Partnership (TPP) agreement, which included a dozen countries, but excluded China, and the Regional Comprehensive Economic Partnership (RCEP) agreement, which included China but excluded the US, it was in a unique position to bring the countries together.
If handled correctly, the negotiations could result in a free trade area covering the Asia-Pacific region, Wong said.
“I want to see more opening of our economy, on a wider range of fronts, with deeper integration into our region and the world,” she said.
“Because freer trade will improve living standards for working people and deliver growth for Australia. And, around the globe, free trade will continue to lift millions out of poverty and to reshape the world economic order.”
Wong said the reshaping of the global economy gave Australia the opportunity to replace the tyranny of distance with the advantages of proximity which could deliver great economic benefits for future generations.”
The prime minister, Tony Abbott, said he welcomed Labor’s approach to the $1bn threshold, and noted higher investment thresholds applied to countries with which an FTA had been finalised.
“It’s certainly something we would like to extend to China as well, should this deal be concluded,” he said on Thursday.“It’s certainly something we would like to extend to China as well, should this deal be concluded,” he said on Thursday.
Wong said Australia needed to acknowledge the reality and necessity of foreign investment in agriculture if it was serious about expanding food exports to Asia.
“It is inconceivable that we will be able to scale up production to fully tap into the growing consumer markets of Asia without foreign investment,” she said. “Placing hurdles in the way of foreign investment in our primary production industries will only jeopardise their growth.’’
Wong also called for protectionist measures introduced during the global financial crisis to be scrapped.
The Liberal senator Zed Seselja criticised Wong for raising the matter while FTA negotiations were under way.The Liberal senator Zed Seselja criticised Wong for raising the matter while FTA negotiations were under way.
“One of the reasons we’ve been able to get these [free trade agreements] done with Japan and Korea is because we do them in a sensible way, we don’t give away our negotiating position … I think this intervention from Penny Wong, their first policy statement, is an extraordinary one,” he told Sky News.“One of the reasons we’ve been able to get these [free trade agreements] done with Japan and Korea is because we do them in a sensible way, we don’t give away our negotiating position … I think this intervention from Penny Wong, their first policy statement, is an extraordinary one,” he told Sky News.
“Hopefully what we achieve with China will be as good [as], or better than, what we’ve achieved with Japan and Korea.”“Hopefully what we achieve with China will be as good [as], or better than, what we’ve achieved with Japan and Korea.”
The shadow treasurer, Chris Bowen, said Labor believed in foreign investment and the government had been at “sixes and sevens” on it.The shadow treasurer, Chris Bowen, said Labor believed in foreign investment and the government had been at “sixes and sevens” on it.
“It goes to our approach of an open economy, an economy which welcomes foreign investment, one which embraces trade and one that says economic growth must be at the forefront of Labor’s agenda,” he said.“It goes to our approach of an open economy, an economy which welcomes foreign investment, one which embraces trade and one that says economic growth must be at the forefront of Labor’s agenda,” he said.