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The Guardian - AU
The Guardian - AU
Daniel Hurst

Australia accuses China of breaching free trade deal by restricting imports

Simon Birmingham
Australia’s trade minister, Simon Birmingham, has told the Senate China’s lack of engagement has prevented proper implementation of the free trade deal between the two countries. Photograph: Mike Bowers/The Guardian

China appears to be breaching its trade deal with Australia by taking a series of “disruptive and restrictive measures” against Australian exports, the Morrison government has said.

As concerns grow among Australian exporters about the impact of a widening range of actions, the trade minister, Simon Birmingham, told the Senate on Wednesday all dispute settlement options were on the table.

The concerns were echoed by Prof Rory Medcalf, the head of the Australian National University’s national security college, who said Beijing was “turning economic goods into goads of coercion” under Xi Jinping’s leadership.

Chinese authorities suspended imports from a sixth Australian red meat processing plant this week, as Australian wine exporters scrambled to find alternative markets after being hit with hefty tariffs.

China has generally defended its trade measures on technical grounds and has denied engaging in a politically motivated campaign of “targeting” of Australian exports, but it has argued it is up to the Australian side to take concrete steps that would allow high-level dialogue to resume.

Birmingham was required to attend the Senate on Wednesday to make an explanation about the China-Australia free trade agreement (Chafta) after the upper house passed an order to produce documents last week.

Birmingham said the Australian government had “become increasingly concerned about a series of trade disruptive and restrictive measures implemented by the Chinese government on a wide range of goods” from Australia.

Those disruptions had “increased significantly in recent months”, he said. “In the view of the Australian government, the targeted nature of Chinese government measures on Australian goods raises concerns about China’s adherence to the letter and spirit of both its Chafta and its [World Trade Organization] obligations.”

He said Australia had raised these concerns with Chinese officials on multiple occasions in both Canberra and Beijing and had spoken up at the WTO committee on trade in goods on 25 November.

Those concerns were about barley, wine, meat and dairy establishments, live seafood exports, logs, timber, coal and cotton.

Birmingham said Chafta included a structure of regular meetings that were meant to create an ongoing dialogue between the two countries but China’s lack of engagement in recent years had prevented the use of those structures.

He said Australia would “continue to raise issues of apparent potential or discriminatory actions targeted against Australia” and was “considering all dispute settlement options in order to support our exporters and to ensure they can compete on fair terms”, including challenges through the WTO.

Medcalf, the ANU professor, argued that “much of the China trauma our diplomatic and economic relations are going through at present” would be seen, down the track, as part of Australia building up its national resilience.

He said many people had opinions about whether the Australian prime minister, ministers or officials “could have chosen this word or that word slightly differently” in managing the China relationship.

But, speaking to an audience that included the head of the foreign affairs department, Frances Adamson, Medcalf argued the differences between the two countries were largely structural and driven by profound changes in China over the past decade.

“I do have a strong view that structurally, if it wasn’t going to happen this year, it was going to happen,” Medcalf told the National Press Club. “That’s not nice news to all the producers and all those in our economy who are being deeply affected by this. But I think it’s the reality.”

Medcalf said there was no easy “reset” available.

“If we expect in 2050 the Australian economy to look exactly the same as it does now, then we should simply be focusing on a reset at all costs, but we’ll lose our national identity in the process and I defy any government to make that choice.”

The independent senator Rex Patrick, who initiated the order to produce documents on Chafta, said he was pleased to hear Birmingham “acknowledge the clear pattern of China’s action in what is a coercive trade campaign”.

“Both the Coalition and Labor were naive in negotiating a free trade agreement with a regime with no respect for the rule of law,” Patrick said.

Advocates of Chafta note the total value of Australian goods and services exports to China has nearly doubled from $87bn in 2015 to $169bn last year.

Labor’s trade spokesperson, Madeleine King, who told Guardian Australia last week the government should not walk away from Chafta, said on Wednesday the Coalition needed to do more to manage the relationship.

King said a Labor government would work with exporters “to build relationships and secure the markets that Australian jobs depend on” and “work with other allied and aligned countries who also face the challenge of a more assertive China”.

The Morrison government has largely enjoyed bipartisan support in its approach in managing relations with China, with some arguments around the margins concerning tone, leadership, and the role of outspoken backbenchers.

Beijing has repeatedly pointed to Australia’s own anti-dumping investigations against Chinese products. Last month China’s foreign ministry argued it was Australia that had undermined cooperation and open trading principles by blocking Chinese investment projects on “ambiguous and unfounded” national security concerns.

Against the backdrop of increasing tensions between the two countries, Greg Moriarty, the head of Australia’s defence department, on Tuesday evening accused China of acting in a “disturbing” manner and complicating Australia’s security environment by building military infrastructure in disputed parts of the South China Sea.

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