The Coronavirus global pandemic has badly hit every economy in the world, irrespective of its strength. With economic powerhouses such as US, Japan, India and many European nations taking major economic hits, the way China and WHO coordinated with each other and their sheer negligence behind the spread of the coronavirus world-wide have outraged these nations along with others. Since, China is a global superpower, there are few nations which can dare to speak against it, US being one. The biggest superpower led by President Donald Trump, questioned the combined role of WHO and China behind the spread of coronavirus from Wuhan, China to the rest of the world. Backing President Trump’s statement was Australian Prime Minister, Scott Morrison who called for an independent investigation into the matter. This act enraged Chinese officials as they got engaged in an increasingly heated argument with Morrison’s government. China’s ambassador to Australia, Jingye Cheng warned the Australian government of Beijing’s plans of severing the strong trading ties between the two nations if it went forward with its investigations. Quoting Cheng,"Maybe the ordinary people will say 'Why should we drink Australian wine? Eat Australian beef?’,” as he hinted of an increase in tariff of Australian imports in China. This was followed by a call between Frances Adamson, head of Australia’s Department of Foreign Affairs and Trade and Jingye Cheng. The international relation between the two countries declined when details of the calls got leaked and Chinese officials denied leaking them, saying "obviously leaked by some Australian officials,” and that “the Embassy of China doesn’t play petty tricks, this is not our tradition.” They added “But if others do, we have to reciprocate,” though.
As diplomatic battles between nations often hit their trade relations, things were no different in this case. China targeted Australian perishable goods and slapped heavy tariffs on barley and halted some imports of beef. The China-Australia (ChAFTA) enacted between the two countries in 2015 could help soften the blow of the diplomatic spat between the two nations as trade lawyers feel.
China, acting on their declining relations with Australia, has drawn up a list of potential goods including wine, dairy, seafood, oatmeal and fruit that could be subject to stricter quality checks, anti-dumping probes, tariffs or customs delays, according to Bloomberg. Sources also said that the Chinese state media might be used to push consumer boycotts of Australian imports, depending on how Canberra decides to work on China’s objections to Australia’s diplomatic stance on the coronavirus pandemic.
Though the trade tensions between the two countries seems clearly to be an aftermath of Australia’s call for an independent investigation of the origins of coronavirus and China’s role behind its global spread, officials at Beijing refuse to publicly acknowledge any relation between the two incidents.
On the rising tensions, Brett Williams, Principal, Williams Trade Law said that people are missing out on the existing dispute on anti-dumping. He said that importers and exporters should not assume that China would slap on more tariffs since the new barley duties and beef export suspensions were based on ‘existing disputes’. The barley duties were part of a long-running anti-dumping disagreement between the two countries, although the timing of the tariff raised suspicion in Australia that China was using technical requirements to punish Canberra for its political position, as it is suspected of having done to other nations in the past. It’s nothing new between these two nations since China too has been hit by Australian anti-dumping tariffs on steel and aluminium before, with Beijing not choosing to raise a WTO complaint. Instead, it chose to apply pressure on the Australian government by carrying out similar orders and thus the recent trade tensions aren’t due to the coronavirus origins investigation that Canberra vouched for.
New import data obtained by South China Morning Post reveals that exports of Australian oats and oatmeal, milk powder and almonds ran into import compliance trouble at Chinese ports last year alongside beef shipments. Zhong Shan, Chinese commerce minister defended China’s act by saying that the investigation into the dumping of Australian barley complied with ChAFTA. The recent banning of beef shipments from Australian producers were blamed to be a result of the products failing to meet import labelling and certification standards as the 80.5% tariff on Australian barley has made exporters fear of more tariffs incoming, on Australian imports, by Beijing.
Though the Chinese foreign ministry has refused to answer questions based on the potential list containing perishable products which could be subjected to stricter quality checks, anti-dumping probes, tariffs or customs delays, spokesman Zhao Lijian said that he hoped Australia would cooperate with China to create “actions that are conducive to bilateral relations and mutual trust”.
As mentioned before, China’s move to slap export bans and tariffs on Australian products have raised suspicions, on Beijing using technical requirements to punish Canberra for proposing an independent international inquiry into the coronavirus outbreak by the WHO, while urging China to “allow transparency”. China has used trade as a diplomatic tool to take revenge on other nations in the past with the discovery of ‘harmful pests’ used on agricultural imports from Canada’s largest exporter, Richardson International. This action by Beijing was believed to be in retaliation for the arrest of Meng Wanzhou, the CFO of Chinese telecommunications giant, Huawei by the Canadian government. Australian exporters, who have suffered losses due to stricter quality checks by China, refused to comment on the scenario as trade tensions between the nations are growing with each passing day with Australian economy bearing the brunt, being the world’s most China-dependent economy. Simon Birmingham, Australian trade minister said how the decline in trade relations could affect both the economies due to China’s recent moves. He added how the ChAFTA has helped China’s industrial capacity to grow and helped in lifting hundreds of millions pf people out of poverty in China and Southeast Asian nations. Zhong Shan, Chinese minister of commerce, in reply to this mentioned how Australian dumping has severely affected China’s barley sector. He took a dig at Australia about launching hundreds of investigations against China since the ChAFTA whereas China has conducted only one trade investigation against the island nation. Birmingham however hoped that the currently poor trade relations between the nations would improve especially in iron ore after China announced reduction in inspection and quarantine of Australian exports.
Since the trade war between China and US seems to be everlasting, the reduction in bureaucratic trade barriers that Beijing promised the US seemed to be a softening act in that war which again puts the China-dependent Australian economy at a risk. How? Reports emerged as experts warned US Allies how the deal between Xi Jinping and Donald Trump could massively increase China’s imports of American agricultural goods and energy products, which means imports of Australian goods would drastically fall. In the wake of this scenario, the Morrison government has asked China to grant Australia similar reduction in bureaucratic trade barriers that China offered the US. A former Australian government foreign affairs adviser argued on Thursday that Canberra could not afford to play “a never-ending game of chicken” with China without greater reassurance from the US on shared end goals. The spillover effect that Australia experienced due to the US-China agreement is of utmost concern to the nation following the ongoing of their own trade war with China. The US-China agreement had Beijing make a promise of spending an extra $200bn on American goods and services over the next two years. As Australia seeks for an extension of a range of technical and administrative measures to make trade easier to flow, Birmingham said that Australia had joined other countries in asking for the promised reduction in bureaucracy to be “extended to all exporters, including Australian exporters, and not just those from the US”. It is unclear whether Beijing will look favourably on the request and the ongoing trade tensions between Australia and China makes it unlikely.
The end of the current tensions between China and Australia will surely be a thing to look forward too and it’s unclear when it would happen. Recent developments indicate that the trade war between the nations won’t be ending anytime soon, as Australia now becomes the victim of a crossfire. As Australian economist, Kym Anderson said, the agreement was “clearly a managed trade deal that is against the spirit of liberal trade in an open multilateral trading system”, a $32bn agricultural imports in two years from US by China will heavily dent an economy which is China dependent. Australia clearly sits at a disadvantage in the scenario as Anderson feels that US imports might even act as substitution for imports from other nations. The US-China agreement also obliges China to increase purchases of American energy products by a whopping $52bn, which also is a major dent for Australian energy exporters. But the chief executive of the Minerals Council of Australia, Tania Constable, said Australian minerals and metals “remain in demand in China and are helping to build cities and power factories as the country recovers from the Covid-19 pandemic”.
Brett Williams on the US-China agreement and the major damage that the Australian economy will thus suffer said that Australia could bring a WTO complaint and establish China had discriminated against imports from countries other than the US – a breach of the “most-favoured nation” rule in the General Agreement on Tariffs and Trade. Collecting evidence may be difficult and slow – especially if the actions included informal guidance from the Chinese government to privately owned enterprises. Williams said WTO agreements were intended to bring about trade on the basis of price competition, “not on the basis of political decisions of powerful governments about the quantities of trade that should flow”. “That two of the most powerful countries in the WTO system can enter jointly into an arrangement to undermine the WTO rules is a worrying development,” he said.
Reports have emerged that China is preparing to ban imports of Australian coal. Being its second-largest buyer, the consequences of the ban would be quite severe at a time when the Australian economy is facing its first major economic downturn in 30 years as the value of AUD is falling heavily. Though the relations between the country might receive a bump over Australian iron ore exports since China offered some relaxation on inspection and quarantine, banning of coal imports might easily be followed by a major ban on iron ore and LNG too (now with importing from US being China’s major preference).
A big question arises at this point. Would Australia shy away from its recommended independent investigation of China on the origins of coronavirus, the factor which clearly seems to have fuelled the trade war, to save the nation’s economy?
I don’t think they would. Australia continues to remain an influential nation globally. Being a developed nation, the country’s global image might take a major hit if they shy away from their recommendation. Australia’s call has been supported by many other nations too, though the US-China trade deal has swayed away a major US support on the issue. The Australia-China trade tensions will remain an interesting and important topic of concern for the global economy for the next few years.
Sources-
1) scmp.com
2) theguardian.com
3) think.ing.com
Author- Suman Majumder
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