Forrest backs China Free Trade Zone to boost farm exports

Mr Forrest’s far-reaching vision has made high-level advances with positive discussions already held between senior Australian and Chinese government officials and business executives.

The project would see a unified economic zone developed to link high-quality Australian farm produce with Chinese customers through common logistical networks and other trade advantages like streamlined biosecurity clearance.

It would turbo-charge the Australia-China Free Trade agreement (ChFTA) that’s already seen major tariff cuts for many major food commodities underpinned by favoured nation status.

Australian agricultural trade to China has climbed from $9.162 billion in 2013 to $10.75b in 2015, according to figures from the Department of Foreign Affairs and Trade, and is tipped to expand more under the ChAFTA.

To be named the Sino Australia Free Trade Industrial Park, the new Zone will be physically located in Zhejiang Provence - a sister province for West Australia - situated on Zhoushan Island.

It will sit alongside the Ningbo-Zhoushan deep water cargo port which resulted from the merger of the Zhoushan Port and Ningbo Port in September 2015.

That port is now regarded as the world’s busiest with combined throughput of 873.47 million metric tons and 215 million standard containers.

Other logistical advantages include close proximity to China’s biggest city Shanghai and the Yangtze River which is the biggest in Asia and a prime corridor for food and other bulk exports.

The BFTZ would be home to modern food processing and food quality testing facilities and modern storage warehouses to facilitate speedier customs clearance processes.

The concept would also provide favourable tax policies and initially seek to focus on live cattle exports, chilled beef and lamb, seafood and other high value-added agricultural products like grains, in the future.

It’s understood an initial $600 million (3b RMB) commitment has been made but the development would need at least $2b (10b RMB) in construction.

The initiative is supported by the Zhejiang Province and the Chinese central government who now want the Australian government to come on board with firm backing.

Chinese officials are looking to model the new project on the logistical success of a similar Economic Zone underpinning the Singapore and China FTA.

Chinese agribusiness giant New Hope Group has committed to the BFTZ concept - to produce products carrying the ASA100 brand - as has one of China’s biggest fund management companies Harvest Fund Management.

Mr Forrest said food products packaged or processed in the BFTZ would be stamped with the “one brand one logo” of his ASA100 initiative, involving prominent Chinese and Australian agri-business leaders.

The ASA100 resulted from a business leaders meeting in early 2014 and aims to capitalise on common objectives linked to the growing demand for high quality food from Australia’s biggest trading partner which has an escalating middle class population.

Mr Forrest is pushing for greater support to develop the comprehensive agri-food-precinct from senior business leaders involved in the ASA100 and governments at both levels.

He said he saw the ASA100 “one brand one logo” as having at least the same impact as the BFTZ in boosting trade between the two countries but operating on different time-lines.

“The BFTZ is a very innovative concept that’s great for China and great for Australia and potentially the most meaningful, solid development, given both countries are continuing to encourage it, to come out of the ChAFTA to date,” he said.

“One brand one logo will be the unheralded hero of making Australian agricultural produce super competitive.

“It’s a long term war of attrition so it may not get the short term accolades but it will have equal value to what will be seen as the demonstrable and fast increase value of Australian agriculture, if the BFTZ goes ahead, like I think it will.”

Mr Forrest’s push on the BFTZ coincides with the Australia Week in China that’s being attended by senior government heavyweights including Prime Minister Malcolm Turnbull, Trade Minister Steven Ciobo, Assistant Trade Minister Richard Colbeck and Trade Ambassador Andrew Robb who will also be briefed on the initiative.

Mr Forrest said the new Zone would help free-up access to the Chinese market which had been “spurred on” and also “authorised and encouraged in thinking”, by the ChAFTA.

He said it was an “absolutely unique” new initiative born out of the ASA100 concept which senior business leaders “should be really proud of” for linking common investment between the two nations.

Mr Forrest said Australian produce could be value added in Australia or that process completed in China within the Zone and products then packaged and distributed, while generating other efficiencies.

He said the streamlined customs clearance process would help Australian food exports avoid being subject to varied rules and regulations in China around biosecurity, that stifle imports in other parts of the country.

As an example, he said exporting chilled beef into China involved dealing with central government biosecurity rules and then a varied providence by province and state by state interpretation of those laws which blocked the FTA’s execution, on the ground.

But Mr Forrest said the BFTZ would allow quarantine clearance to occur according to “exacting standards” that applied in Australia where the highest quality and safest food in the world is produced.

“We’ll have an opportunity to really maximise the volume of high quality products going into China from Australia,” he said.

“The world will not run out of food; what it will always be short of is high quality pristine reliable food and that’s where Australia comes into its own.

“Easy supermarket, distributor recognition, with the one brand one logo is step two – but step one is how do you get that food into China really quickly and efficiently, without going through all of the draconian and sometimes impossible to penetrate structural impediments which can stop free trade between countries.”

Mr Forrest said he anticipated the BFTZ concept would face several challenges including ensuring it remained a legitimate Free Trade Zone and not just one Chinese company or other Chinese companies in control.

He said Australian investors also needed first preference in the project which would also be seen as a really good idea that may subsequently attract moves by entrepreneurs to take total ownership.

But he said he would resist that temptation because he wanted the Zone to be “for every Chinese food distributor and Australian food grower business organisation who want to invest into making sure that they’re products are treated with absolute, immaculate care”.

“Australian businesses must be able to invest in that Zone otherwise it’ll just become China food that’s branded Australian,” he said.

“And that’s not going to wash at all with Chinese consumers because they want to know it’s Australian made and packaged – the whole box and dice – but you also need that efficient environment for it to happen.”

Mr Forrest would not be drawn on a potential date to complete the project’s construction and cut the red ribbon at an opening ceremony - but stressed he’d remain patient.

“If you look at the development of the things I’ve done, I’m incredibly patient when there’s overall benefit to Australia involved and to making positive difference and I’ll continue to be very patient,” he said.

“If you say how long is that piece of string, I don’t know because, it will involve governments choosing to facilitate it, not negate it or study it out of existence.”

In mid-2014, Mr Forrest’s company Minderoo purchased WA’s largest beef processor Harvey Beef and announced upgrades to capitalise on the growing food demand from the Chinese market and diversify his business interests, given the expected reduced, future economic influence of mining.