Australian Prime Minister John Howard's visit to Beijing this week raised the prospect of a final decision between the two countries on a bilateral free trade agreement. Any free trade deal would be good news for Australia's wool industry.

China is now Australia's third largest trading partner and fourth largest export market, with two-way trade worth US$15 billion in 2002. Wool is Australia's second largest export to China after iron ore.

Australia's Wool Producers' Association is certainly in favour of a trade deal. The Association's president Simon Campbell told the press that even though tariffs to China are not huge, an agreement would strengthen relationships with the industry's largest customer.

It seems likely that China's appetite for Australian wool will only grow - in China wool is seen as a sign of quality.

Australia's wool industry could certainly do with the extra orders. The Australian Bureau of Statistics has revealed that the national sheep flock is estimated to have dropped below the 100 million mark to its lowest level since 1948 and war, SARS, drought and a European retail slowdown have all harmed the industry.

If Howard can get a trade deal with China then Australia's wool producers may get the shot in the arm they are looking for.