Fixing China relationship 'biggest test' for Australia

In a speech to the National Press Club in Canberra, Trade Minister Don Farrell encouraged Australian businesses to continue to diversify despite the positive signs from Beijing.

"One of our biggest priorities has been to work to stabilise our relationship with China, by far our largest trading partner," he said.

"Since the day I took on the job as Australia's trade and tourism minister, it's been the biggest test ... we are making progress."

Senator Farrell said the messages he received from Chinese authorities were that things were heading in the "right direction" for the removal of tariffs on Australian barley.

The government agreed to suspend its case against Beijing at the World Trade Organisation in return for China fast-tracking its review of the tariffs.

The trade minister said that process was close to being completed, but if Beijing didn't scrap the full tariff, Australia would resume its case with the WTO.

"We've got a free trade agreement with China ... we want the Chinese government to comply with their obligations under that free trade agreement," he said.

"That's our expectation."

On negotiations with the European Union for a free trade deal, Senator Farrell said Australia was prepared to extend the mid-year deadline by which they were originally expected to be finalised, to "find a way through".

"Negotiations will continue to be tough, but an outcome must be fair," he said.

He will travel to Brussels next week for a face-to-face meeting with the EU's trade commissioner to end the stalemate.

Geographical indicators for food products and Australia's luxury car tax are among the major sticking points.

The government has resisted the EU's demands Australian businesses give up naming rights to products including prosecco and feta.

Australian Associated Press