China and Australia may be one step nearer to launching talks on building a bilateral free trade area (FTA), as a feasibility study to be released this month strongly endorses the proposal.

"China and Australia are highly complementary in economy and trade, and an FTA between the two sides would benefit both countries and promote a bilateral cooperative relationship for mutual prosperity," Vice Minister of Commerce Ma Xiuhong cited the report as saying.

At a China-Australia FTA symposium, Ma told approximately 120 officials, scholars and business people from both countries that the finishing touches are now being put on the feasibility study, which has progressed smoothly over the past 15 months.

Chinese and Australian experts have been working on the study since the two countries signed the Trade and Economic Framework in October 2003, during President Hu Jintao's visit to Australia.

Australia is the largest developed country exploring an FTA deal with China, which has been working on establishing FTAs with the 10-member Association of Southeast Asian Nations, the six-member Gulf Cooperation Council, the five-member South African Customs Union, Chile and New Zealand.

No specific timetable has been given for announcing the formal launch of Sino-Australian FTA negotiations, but analysts believe that it could come in April, when Australian Prime Minister John Howard visits China for the Bo'ao Forum.

Geoff Raby, deputy secretary of Australia's Department of Foreign Affairs and Trade, said at the symposium that the two governments will decide after the completion of the feasibility study whether launch the negotiations.

"Both governments will give careful consideration of the results, and carefully weigh all elements to reach the decision," he said.

China is now Australia's third largest trading partner, second largest export market and second largest origin of imports.

Trade between China and Australia has been growing rapidly in recent years. Two-way trade reached US$20.4 billion in 2004, up 50.3 percent from the preceding year, double the figure of 2002 and more than 230 times the figure when the two countries established diplomatic relations in December 1972.

Service trade between the two countries has also soared, with trade in education hitting US$250 million in 2003. About 60,000 Chinese are studying in Australia.

China has proposed that special attention be given to its agriculture and service trade in FTA negotiations, as a China-Australia FTA would exert pressure on China's agriculture and service sectors.

Ma said that China's agriculture and service sectors are quite vulnerable as they are less developed than Australia's.

Earlier this year, Australian Trade Minister Mark Vaile said he believes that Australia can secure a free trade deal with China by the end of 2007.

Meanwhile, China and the Republic of Korea (South Korea) have initiated a joint nongovernmental feasibility study on an FTA, according to Wang Mengkui, director of the Development Research Center (DRC) of the State Council.

Wang and Kyung Tae Lee, president of the Korea Institute for International Economic Policy (KIEP), signed a memorandum for the joint study on Sunday in Beijing and made the announcement on Monday.

In 2004, China and South Korea agreed to have the feasibility study prepared and designated DRC and KIEP for the project.

In 2004, trade between two countries hit around US$90 billion, a year-on-year increase of 42.4 percent. China is South Korea's largest trading partner and South Korea is China's fourth largest.

(Xinhua News Agency March 22, 2005)