China and Australia will on Monday sign a landmark free trade deal more than a decade in the making, Australian Prime Minister Tony Abbott said, opening up markets worth billions to Australia and loosening restrictions on Chinese investment.
The deal, which Chinese President Xi Jinping is due to sign on a state visit to Canberra, will open up Chinese markets to Australian farm exporters and the services sector while easing curbs on Chinese investment in resource-rich Australia.
"I look forward to making further announcements on this landmark agreement later today," Abbott said in a statement.
Australia is attempting to transition from a reliance on exports of minerals such as coal and iron ore to expanding its food and agricultural exports to a growing Asian middle class, moving from a "mining boom" to a "dining boom".
China is already Australia's top trading partner, with two-way trade of around A$150 billion ($130 billion) in 2013.
Paul Glasson, the National vice President of the Australia China Business Council, hailed the much-improved access for up to 40 service industries including health, law and aged care, as well as for agricultural products such as dairy, rice, wheat, wool and cotton.
"Up to 95 percent of our exports over time will enter the Chinese market tariff free," parliamentary secretary Josh Frydenberg said in a television interview on Sunday.
Xi, in a warm address to the Australian parliament, pledged to deepen his country's cooperation with Australia and reaffirmed China's willingness to resolve territorial disputes with its neighbors through diplomatic means.
"During my visit, the two sides have decided to elevate our bilateral relations into a comprehensive strategic partnership and announced the substantial completion of FTA negotiations," Xi said.
"...The Chinese Government is ready to enhance dialogue and cooperation with relevant countries to jointly maintain freedom of navigation and safety of maritime rules," he said.
Dairy, wine, minerals
The agreement will give Australian dairy farmers tariff-free access within four years to China's lucrative infant formula market, minus any of the "safeguard" caps that currently restrict competitors from New Zealand, the Sydney Morning Herald reported, citing sources.
"Australia has been marginalized from being a major exporter to China in the last few years, one of the reasons being that milk production (there) has been going down over the last decade," said Sandy Chen, dairy analyst at Rabobank in China.
Wine makers, currently selling more than A$200 million worth of goods to China each year despite tariffs of between 14 and 30 percent, will also see tariffs eliminated over four years, it reported.
Tariffs on horticultural products, seafood and other goods accounting for 93 percent of Australian exports by value will also be reduced to zero by 2019, according to the newspaper.
The Minerals Council of Australia said it understood that the agreement would eliminate a 3 percent coking coal tariff immediately and a 6 percent tariff on thermal coal within two years.
Hundreds of protesters gathered at Parliament House on ahead of Xi's arrival. Huge banners in English and Chinese exhorted the leader to "Free Tibet" and end what they called the persecution of religious sects such as Falun Gong.
Xi was in Canberra after attending the G20 leaders' summit at the weekend in Brisbane. His visit was also scheduled to include stops in Sydney and Tasmanian state capital Hobart.
The free trade agreement caps a string of breakthrough deals for Xi. Last week he jointly announced with U.S. President Barack Obama a groundbreaking plan to cap and eventually roll back carbon emissions, as well as reaching a "substantial conclusion" of a free trade deal with South Korea.
The deal also caps a year of trade achievements for Abbott, following free trade agreements with Japan and South Korea.