A mine worker looks at stacks of coal in an open-cast steam coal mine located in the Ordos mining district, Inner Mongolia Autonomous Region, March 14, 2014. China's top producing coal province of Inner Mongolia, where Ordos is located, is in crisis. Tumb
IN PHOTO: A mine worker looks at stacks of coal in an open-cast steam coal mine located in the Ordos mining district, Inner Mongolia Autonomous Region, March 14, 2014. REUTERS/Fayen Wong REUTERS/Fayen Wong
A mine worker looks at stacks of coal in an open-cast steam coal mine located in the Ordos mining district, Inner Mongolia Autonomous Region, March 14, 2014. China's top producing coal province of Inner Mongolia, where Ordos is located, is in crisis. Tumbling prices, caused by weaker demand due to slowing growth in China and a flood of cheaper imports, have forced many smaller miners out of business, while some major firms are slashing wages by up to 50 percent to stem heavy losses. Picture takan March 14, 2014. REUTERS/Fayen Wong (CHINA - Tags: ENERGY BUSINESS)

Australian Treasurer Joe Hockey said on Tuesday that there is a chance that China would waive its newly imposed coal tariff if Canberra and Beijing would soon ink a free trade agreement.

Ahead of the APEC Finance Ministers' gathering, Hockey said in Beijing that he told Chinese Finance Minister Lou Jiwei of his disappointment and surprise at the reinstatement of tariffs at 3 per cent for metallurgical coal and 6 per cent for thermal coal. Since coal is the second-largest commodity export of Australia, it is expected to affect the country.

Lou defended the return of the tariffs this October to help struggling coal producers in Chinese. He assured that China is not using the tariffs as a negotiating tool for free trade talks with Australia.

But Australian law firm Corrs Chambers Westgarth doubts, saying in a note quoted by The Sydney Morning Herald, "We believe China's motivations behind the tariffs are broader than an attempt to protect its domestic coal producers ... Quite possibly this is a politically astute move to motivate the Australian government to reconsider its treatment of Chinese imports before the end of the Australia-China Free Trade Agreement negotiation process."

Despite the push by pro-environment groups for lesser global reliance on coal as a source of energy in favour of cleaner and renewable sources, Whitehaven Coal Chief Executive Paul Flynn said the growth in underlying physical tonnes needed to meet anticipated demand is extraordinary.

"There is no set of scenarios where we can't imagine that coal continues to be the mainstay of the global energy needs of the world," he said.

Prime Minister Tony Abbott has stated that he hopes to sign an FTA with China during the G20 summit, to be hosted by Brisbane, when Chinese President Xi Jinping visits in November. He hopes the deal he would cut would be as good as what New Zealand secured for its agricultural exports.

Indonesia, which had an existing FTA with China, is not slapped tariffs for its coal exports to the Asian giant.

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