AUSTRALIAN coal will be exempt from new import tariffs imposed by China when the two countries sign a free trade pact, Australia’s Treasurer Joe Hockey said after a meeting in China, although the timing of a deal has yet to be finalized.

    China and Australia are trying to seal a free trade agreement (FTA) before the end of this year after nearly 10 years of negotiations, in a bid to boost two-way trade already worth more than A$150 billion (US$132 billion).

    Amid the talks, China said this month it will impose a 3 percent tariff on coal used in steel mills and a 6 percent tariff on coal used in power stations, hitting A$9 billion worth of exports from Australian miners already reeling from a slump in prices.

    “Once we have an FTA, it will be abolished. The quicker we get an FTA, the quicker the tariffs will go,” Hockey said after meeting Chinese Finance Minister Lou Jiwei in Beijing on Tuesday.

    “I think on both sides we are now more determined to get this done. I suspect it has caused some embarrassment to some people in China and it is a source of frustration for us, but there is a way through.”

    China took nearly a quarter of Australia’s metallurgical coal exports in the year to June 2014, and about a fifth of its thermal coal exports, used in power stations.

    The tariffs will put coal exports from Australia at a disadvantage to its biggest rival, Indonesia, which is exempt under China’s free trade pact with the Association of Southeast Asian Nations.

    “The immediate elimination of tariffs on Australian coal exports is a key objective for the sector and we understand the Minister for Trade Andrew Robb will be seeking to secure that outcome as negotiations come to a conclusion over the next month,” the Minerals Council of Australia’s coal director Greg Evans said in an emailed statement.(SD-Agencies)