Australia signs free trade deal with China

China and Australia sealed a landmark free trade agreement on Monday that could significantly expand trade between the two economies.

Australia, which signed trade deals with Japan and Korea earlier this year, says China is its largest trading partner, with two-way trade of $130 billion Australian ($128 billion Cdn) in 2013.

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Its taken more than a decade to negotiate the deal which will open up the huge Chinese market to Chinese farm exports and the services sector.

Australia, like Canada, has been a predominatelyresource-based economy. It now has the promise of a large middle-class population wanting its high-quality food products and services.

Eases restrictions on Chinese investment

The deal also eases restrictions on Chinese investment in Australian resources, with any investment of less than $1.08 billion no longer requiring approval by the Foreign Investment Review Board.

FIRB approval is still required for Chinese investment in media, telecom or defence industries.There is also a lower threshold for investment in Australia's agriculture and food sector.

Australian Prime Minister Tony Abbott and Chinese President Xi Jinping signed a memorandum of understanding clinching the agreement during a ceremony in parliament in Canberra.

"This has been a 10-year journey, but we have finally made it," Abbott said.

Xi praised the deal in an address to parliament, reaffirming China's willingness to resolve territorial disputes with its neighbours through diplomatic means.

"As long as we have our long-term and the larger interests in mind, increase positive factors and remove obstacles we will certainly forge a closer and more comprehensive strategic partnership between us," he said.

Touch on climate change issue

Abbott said the deal is the best ever between Beijing and a Western country.

The leaders also pledged to work jointly to combat climate change by sharing technology.

Highlights of the deal:

AGRICULTURE

• Dairy: removal of all tariffs of up to 20 per cent in four to 11 years.
• Beef: removal of tariffs of 12 to 25 per cent over nine years.
• Wine: removal of all tariffs of14 to 20 pe rcent, over four years.
• Horticulture: removal of all tariffs up to 30 per cent in four years.
• Wool: Australia-only duty free quota.
• Cotton, rice, sugar wheat: review in three years.
• Live animal exports: removal of tariffs of 10 per cent in four years.

RESOURCES

• Coking coal: removal of 3 per cent tariff from start of FTA.
• Thermal coal: removal of 6 per cent tariff in two years.
• Copper: removal of tariffs of one to twoper cent, from start of FTA.
• Aluminum: removal of 8 per cent tariffs.

SERVICES

• Health: Australian owned hospitals and aged care facilities allowed to be established in China.
• Tourism: Australian operators allowed to build and operate hotels and restaurants in China.
• Financial: Yuan clearing bank designated in Sydney allowing overseas trading of China's currency for the first time.