Australia Says New Japan Ties Won’t Slow China Trade Deal

Australia’s agreements with Japan over security and commerce aren’t hampering efforts to strike a free-trade deal this year with China, its biggest economic partner, according to Trade Minister Andrew Robb.

Japan and Australia last week signed accords on defense technology transfers and tariff reductions, as Shinzo Abe made the first formal visit to Australia by a Japanese prime minister since 2002.

Australian Prime Minister Tony Abbott is seeking to add trade agreements while balancing diplomatic ties with China and Japan, amid a dispute between the nations over a group of uninhabited islets in the East China Sea. Abbott’s government has concluded deals this year with both Japan and South Korea, which together with China buy more of Australia’s iron ore, coal and other exports than the rest of its customers combined.

Discussions with a Chinese counterpart in recent days had offered no evidence that the deals with Japan “has had any impact on our relationship,” Robb said today in an interview with Sky News television. “I saw no sense of concern about the last week.”

Abe, who said he’d discussed with Abbott attempts by China to “change the status quo” in the region has faced criticism from China’s President Xi Jinping over a reinterpretation of his country’s pacifist constitution. Abbott was chided in China’s media over comments made during Abe’s visit in which he described “the sense of honor” of Japanese soldiers during World War II.

G-20 Summit

“The agreement with Japan will benefit our farmers and our businesses,” Abbott said today in an e-mailed statement. Once the deal is fully implemented, 97 percent of Australian exports to the world’s third-largest economy will receive preferential access or enter duty-free, while domestic consumers will benefit from cheaper car parts and household items, according to the statement.

Trade liberalization will also be a focus of this year’s Group of 20 leaders summit, which is being hosted by Australia in Brisbane in November. “The outcome should be more jobs, better infrastructure, freer trade and greater co-operation,” said Abbott. “These are the foundations of stronger economies.”

Business leaders from around the world will be in Sydney this week as part of the associated B-20 meeting.

Surging Trade

An agreement with China has become a greater economic imperative as the nation has increased trade with Australia by 77 percent since 2009, and it’s the biggest consumer of iron ore, Australia’s most valuable export. Two-way trade between the nations in 2013 reached A$150 billion ($141 billion), more than double the value of Australia’s partnership with Japan, its second largest economic partner.

While Chinese economic growth is slowing, there will still be scope for countries such as Australia to gain from trade with the world’s most populous nation, Reserve Bank of Australia Governor Glenn Stevens said in an interview published on The Australian newspaper’s website.

“It’s just we have to be sufficiently adaptable to see those opportunities and go and take advantage of them,” Stevens was quoted as saying. “They don’t just drop in our lap.”

Tensions over trade with China increased after Australia’s previous Labor government, ousted in a September election, cited national interest concerns in its refusal to allow Huawei Technologies Co., China’s largest phone-equipment maker, work on Australia’s A$30 billion broadband infrastructure project.

Abbott, who completed Australia’s free-trade deal with South Korea in April, said in March he’s seeking to finalize an accord with China this year.

“We have still got quite a lot of negotiation to go, but I think we have settled on a framework that means we can achieve it in the time frame,” Robb said today. “We are on the case, and are still on track to conclude something significant by the end of the year.”

To contact the reporter on this story: David Stringer in Melbourne at dstringer3@bloomberg.net

To contact the editors responsible for this story: Stanley James at sjames8@bloomberg.net Benjamin Purvis

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.