Australian government asks China for same reduction in trade barriers as US

Australian government asks China for same reduction in trade barriers as US

14:30 - Request emerges as experts warn of ‘collateral damage’ from Xi Jinping and Donald Trump deal to end trade war. China’s decision to impose 80% tariffs on barley from Australia coincided with a move to allow imports of the same product from the US.

The Morrison government has asked China to grant Australia the same reduction in bureaucratic trade barriers that Beijing has promised the United States.

The request emerged as experts warned that US allies such as Australia could suffer “collateral damage” from a deal between Xi Jinping and Donald Trump to massively increase China’s imports of American agricultural goods and energy products.

Similarly, 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.

There is increasing concern about the spillover effect on Australia of the agreement that halted the trade war between the US and China, in which Beijing promised to spend an extra US$200bn on American goods and services over two years.

China’s decision this month to impose 80% tariffs on barley from Australia – amid tensions over the call for a coronavirus inquiry – coincided with a move to allow imports of the same product from the US.

Australia’s trade minister, Simon Birmingham, sought to quell fears over potentially wider impacts of the deal, saying the government expected pork, poultry and soybeans to make up a large share of the commodities exported from the US to China.

Australia’s key exports – such as beef and wine – would “continue to maintain tariff differential advantages” in China. But Birmingham acknowledged it may take time for the impacts to become clear.

In the meantime, Australia is seeking an extension of a range of technical and administrative measures to make it easier for trade to flow.

Expert analysis shows the deal obliges China to provide enhanced market access for imports of US agricultural goods including beef, dairy, infant formula, poultry, port, processed meat, seafood, rice and grain. This includes removing import restrictions, relaxing procedural requirements for safety inspections, and easing product standards and labelling rules.

Birmingham told the Guardian 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, given ongoing tensions in the relationship. China has suspended beef imports from four Australian abattoirs on technical grounds and has reportedly drawn up lists of other potential targets for action, such as wine and dairy.

Weihuan Zhou, a trade expert and senior lecturer at the University of New South Wales, said given China’s commitment to purchase vast amounts of American goods, he saw a risk of Australian exporters becoming collateral damage, but hoped Australia could avoid becoming “a casualty in the crossfire”.

Kym Anderson, a professor emeritus at the University of Adelaide’s school of economics, said the agreement was “clearly a managed trade deal that is against the spirit of liberal trade in an open multilateral trading system”.

Anderson said Australian exporters should be concerned about Beijing’s commitment to purchase an extra US$32bn of agricultural exports from the US over two years, as the current slowdown in China’s income growth “necessarily means China will import less farm products from other countries including Australia”.

“The death of many pigs because of swine fever in China reduces the immediate demand for US corn and soybeans, adding to the difficulty for China of importing extra US produce,” Anderson said.

Dr John Lee, a senior adviser to the then foreign affairs minister Julie Bishop from 2016 to 2018, said the pandemic had reduced demand in the Chinese market for a number of exports.

“This means that if China is sincere about trying to meet its increased targets of US exports, some US goods might well be a substitution for exports from other countries,” he told the Guardian.

Lee, who is a senior fellow at the University of Sydney’s United States Studies Centre, called on the US to share its goals with its allies when it came to reforming the World Trade Organization and China’s engagement with it.

“Smaller countries like Australia … cannot afford to play a never-ending game of chicken with large powers like China,” Lee said at a United States Studies Centre-hosted panel event on trade tensions and economic coercion on Thursday.

“They cannot even really afford to play a game of poker with China when we don’t even know what the prize might be or whether there’s even a prize at the end of the game.”

Elizabeth Rosenberg, a senior fellow at the Center for a New American Security, cited the barley issue as an example of “this sort of push-and-pull by China to try and apply friction to the already tenuous relationship the United States has with many allies and partners”.

The deal also obliges China to increase purchases of American energy products – including coal and liquefied natural gas – by $US52bn over two years.

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”.

Labor’s foreign affairs spokeswoman, Penny Wong, has urged the prime minister, Scott Morrison, to call Trump to pursue concerns about the deal’s impact.

Brett Williams, a trade lawyer at Williams Trade Law in Sydney, said it was plausible 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.

But 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.

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