An historic free trade agreement between Australia and China looks set to be signed within days with Foreign Affairs Minister Julie Bishop more "optimistic" than ever that the long sought deal will materialise.
It comes as security relations in the world's most dynamic and populous region appeared to warm as the two great north Asian rivals, China and Japan, took the first tentative steps towards lowering tensions over disputed islands in the East China Sea.
"It's looking very positive": Foreign Affairs Minister Julie Bishop said negotiations were continuing but she was confident sticking points could be ironed out.
"It's looking very positive": Foreign Affairs Minister Julie Bishop said negotiations were continuing but she was confident sticking points could be ironed out. Photo: Andrew Meares
The proposed trade agreement would unlock lucrative markets for Australia, especially in professional services across education, information technology, health, urban planning, engineering, and architecture, as well as management expertise and improved governance.
Speaking in Beijing ahead of the arrival of Prime Minister Tony Abbott and more than 20 other Asia Pacific world leaders, Ms Bishop welcomed the staging of the first talks between Chinese and Japanese foreign ministers in years.
"This is the first formal bilateral meeting they had in over two and half years, so, we are hopeful that this is the beginning of a new relationship between China and Japan," she said.
"This is what Australia has been urging both China and Japan to achieve over some time; in my meetings with China and my meetings with Japan, I urged both to resolve their differences."
But she said it was too early to say whether it would result in a durable dispute resolution mechanism to prevent overreaction, even though that was in the best interests of the two nations and the region more broadly.
"It's not just about the relationship between China and Japan, for their relationship affects the region, it has an impact globally, so we are hopeful and optimistic that this is the start of a new era in Japan/China relations."
Ms Bishop also flagged that a new trade agreement with Beijing removing or substantially lowering import tariffs on Australian goods and services, and potentially worth billions of dollars in new exports, was within reach.
"It's looking very positive, and [Trade Minister] Andrew Robb assures me that the areas of negotiation have narrowed significantly, so we are quite optimistic, but there's not an agreement until everything's agreed," she told Fairfax Media exclusively.
"They're continuing to negotiate and I believe that some considerable progress has been made of recent days so we will obviously push for as early an agreement as we're able to get."
Sources close to the line-by-line negotiating process were confident that the remaining sticking points could be ironed out to facilitate a signing during the forthcoming visit of President Xi Jinping for the G20 and subsequent bilateral talks.
But they warned also that the hardest things to agree on were often left to last, raising the risk of a collapse.
Two-way trade between Australia and China topped $150 billion last year and continues to grow, making it Australia's most important economic relationship; worth 10 times that of trade with the second most populous country in the world, India, at about $15 billion.
While lifting productivity growth is a major theme at next week's G20 summit, including a focus on taxation reform, deregulation, and infrastructure construction to defibrillate stalled domestic economies, trade is the big agenda item at the APEC meeting with no less than three multilateral trade agreements also being pushed from various quarters including China's preferred FTAAP or free trade agreement for Asia and the Pacific, and the United States' TPP or Trans-Pacific Partnership.
APEC represents some 57 per cent of the global economy and includes giants such as the US, China, Japan, South Korea, and Russia.
Mr Abbott will meet Russian President Vladimir Putin in Beijing just weeks after the Australian leader promised to "shirtfront" him over the MH17 atrocity.
President Xi will address the Australian Parliament on the Monday after the G20 summit in Brisbane.
Mr Robb, who has been at the forefront of the Australia-China FTA talks, said the challenge for Australian business was to lift its sights to the full potential of a massive Chinese economy transitioning from manufacturing to services.
"We're at the very sharp end of our negotiations with the Chinese," he told reporters in the Chinese capital.
He said there were "tens of thousands of opportunities".
"It's a sweet spot for us . . . any service to do with aged care or health or education or architecture . . . all of these things, there's a really keen focus because that's where the jobs are.
"Australia is so well-placed to help China develop so many of these service capabilities. It's quite an exciting time to be negotiating this deal because of the significance and the complementarity of what's happening here in China with what we're good at."
True to its emerging role as a common friend to Washington and Beijing, Canberra officially supports both the American and Chinese pushes to liberalise trade in the region.
"The TPP could fold into a region-wide FTA and I strongly support . . . the ultimate objective of getting a FTA for the Asia-Pacific [region]," Mr Robb said.
He said Australians should not fear increased movement of Chinese labour in Australia.
"There should be no concerns on this front. Like all of the other agreements that have been conducted by both sides of politics, there is provision for what they call the movement of natural persons. If you were investing hugely in another country, invariably it's not unreasonable you might want your top executives who help you deliver projects in your own country to at least spend some time on a new project because you know the people and trust them.
"Overwhelmingly the workforce, and that's been our history, our history of a country that has welcomed foreign investment for 200 years, our history has been it's created the jobs for Australians. We won't deviate from the traditional pattern of deal in this regard. The wages, they're set by law in Australia and that will apply again to anything we do with the Chinese."
Mr Robb also expressed hope that a proposed Asian infrastructure investment bank could go ahead with Australian involvement.
"We want to join and we think it would be a great thing for the region," he said. "There's a $750 billion infrastructure deficit in the region and if there is a bank which is able to fill much of that gap, we want to be a part of it. I'm very hopeful, and from the discussions the Chinese have said to me, they want world's best governance practices incorporated into this bank. If that is delivered, we'll be there."
