China-EU investment accord ‘is a positive outcome’, says Dan Tehan

Trade Minister Dan Tehan has welcomed the EU-China in-principle agreement on investment.

Trade Minister Dan Tehan. Picture: AAP

Trade Minister Dan Tehan has hailed “another positive step in the EU and China relationship” after the two parties signed an in-principle agreement on an investment accord following seven years of negotiations.

The deal promises to open new Chinese markets for European companies but has raised concerns in Washington, with some US officials expressing concern the accord will help Beijing deflect external pressure to reform its state-driven economic model.

Jake Sullivan, US president-elect Joe Biden’s pick for national security adviser, last week obliquely cautioned European capitals against rushing into the deal.

EU officials say they are gaining more than they are giving in the deal, which has won backing from leaders of all 27 countries in the bloc but still needs their governments’ formal approval and will face a vote in the European Parliament. The Europeans also say the pact provides similar advantages to those the US gained when it signed its “phase-one” trade agreement with China, which took effect early this year.

Mr Tehan said Australia welcomed “open, rules-based trade and investment agreements”.

“We see this as another positive step in the EU and China ­relationship,” he told The Aust­ralian on Thursday.

The Morrison government also stressed it would welcome deeper engagement with the Chinese following a steady deterioration in the relationship with Beijing and the recent escalating trade conflict.

This followed reports that Chinese Foreign Minister Wang Yi privately told former prime minister Kevin Rudd two weeks ago that the decline in the relationship was unwanted and that Beijing would like the relationship improved “as early as possible”, although the onus was on Australia to get the ball moving.

Speaking before Christmas, Foreign Minister Marise Payne said more contact would “assist in the understanding and the dealing with issues that currently face both Australia and China”.

Mr Tehan also hailed the latest round of tariff cuts kicking in from January 1 under the network of free trade agreements secured by Australia, arguing that farmers and businesses would benefit.

Australian fresh or chilled beef exporters will benefit from further cuts to Canadian tariffs under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. The value of fresh or chilled beef exports to Canada increased by 92 per cent to reach $33m in 2019-20.

“Tariff reductions on Australian sheep and goat meat exports under our bilateral free trade agreement with Korea helped increase those exports by 8 per cent, to reach $169m in 2019-20,” Mr Tehan said. “Starting today (Friday), tariffs on these products will be cut from 6.7 to 4.5 per cent.

“Under our bilateral free trade agreement with Indonesia, honey exporters will benefit from tariffs being cut from 3.25 to 3 per cent. Honey exports to Indonesia increased by 191 per cent to reach $808,000 in 2019-20.”

Mr Tehan said the proportion of Australian trade covered by free trade agreements was about 70 per cent, up from about 27 per cent in 2013.

Agriculture Minister David Littleproud said 2021 would be a huge opportunity for agricultural, food and fisheries exporters.

Additional reporting: Dow Jones