AUSTRALIA and China are in the initial stages of considering a free trade agreement (FTA).
China is seeking from Australia recognition as being a market economy, as a condition of its agreement to start the formal negotiations.
Australia recognises China as an economy in transition.
China made it clear it would not be willing to pursue a FTA with Australia unless market economy status was granted.
The change in status could impact on Australia's anti-dumping arrangements for China.
Some Australian manufacturing sectors, such as the plastics and chemical industries and a significant proportion of the Australian Industries Group, were concerned about the change.
They believed it would bring with it unfair competition and while they have publicly said they do not want to sink an FTA, they remained concerned about the dumping of cheap Chinese goods into Australia.
They therefore resisted the proposal in submission to the Federal Government.
The concerns were set to derail the preparations for the negotiations, despite the government providing briefings to industry on the issue.
Government said the change in status would have no material impact on Australia's anti-dumping regime.