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Australia to hold the line on rules-based trade in China dispute: Birmingham

Neil Lyon, May 21, 2020

Minister for Trade, Tourism and Investment, Senator Simon Birmingham, said Australia would continue to apply the principles of a rules-based global trading system to resolve its trade dispute with China.

AUSTRALIA will continue to apply the principles of a rules-based global trading system in response to recent moves by China to impose an 80 per cent tariff on Australian barley imports and suspend four Australian meat processing plants.

Speaking on today’s Rural Press Club of Queensland’s lunchtime webinar, Minister for Trade, Tourism and Investment, Senator Simon Birmingham, said Australia was a staunch defender of a global, rules-based trading system and he re-affirmed Australia’s resolve to challenge the Chinese decisions through the proper processes.

He cautioned that the matter should be treated as any other trade disagreement, and not escalated into a wider dispute.

“Some people want to say we are in a trade war, some even try to use Cold War rhetoric. We need to keep a perspective. Trade disputes are as old as civilisation itself,” he said.

Senator Birmingham said as Australia’s largest trading partner, China had been crucial to Australia’s standard of living, but it was important not to overstate that.

“We should also be mindful that the trade benefits that flow between Australia and China are mutual benefits. The China-Australia Free Trade Agreement has developed real gains to both of our countries,” he said.

China’s barley tariff

Senator Birmingham said Australia strongly disagreed with China’s assertion that Australian barley producers were dumping subsidised barley into China below cost.

“Our barley producers operate free of any type of distorting government subsidies. They certainly don’t go around the world dumping product on other nations at below cost value. We will defend their integrity as strongly as we possibly can,” he said.

Proper processes

Questioned over what he thought China’s motives were for applying the trade sanctions to barley and beef, Senator Birmingham said:

“I can’t tell you what China’s motivations are. I can only report what they tell us publicly and privately, which is that these are regulatory matters which they are handling in the usual regulatory way.

“On the barley front, we don’t think the case has validity and we reserve our rights to continue to appeal and pursue that to get a fair outcome for our barley producers.

“On the beef front, we are seeking to rectify the issues.

“The best thing I can do for our farmers and exporters is not to conflate these issues with other matters as some may seek to do, but instead focus on getting a resolution by engaging in the proper processes.”

Step to barley resolution

In seeking a resolution to the barley impasse, Senator Birmingham said all parties should be mindful there were mutual interests at play.

“China’s brewing industry has valued our malting barley for years. They recognise the value of the Australian product. It will be those Chinese businesses and consumers who will pay the price of having to pay more for barley or get substandard product from other countries,” he said.

“We hope there will be reconsideration. We will continue to mount strong arguments in defence of the Australian industry, and will maintain our right to apply all possible sanctions or opportunities in terms of seeking to resolve it, using the normal pathways through China’s domestic systems or the WTO (World Trade Organisation) if we need to.”

WTO anti-dumping rules

Senator Birmingham said every nation had a right to use anti-dumping mechanisms to counter trade distorting practices that caused potential damage to their industries, but “in a fair and square way”.

“Our gripe is not that China has used an anti-dumping mechanism against Australia, our concern is that in using that anti-dumping mechanism we don’t believe the findings of the case, or the way in which the case was heard, have given due credence and consideration to the evidence that was presented by Australia clearly demonstrating that our producers aren’t subsidised and don’t dump their product in the Chinese market,” he said.

Delayed WTO dispute resolution

Senator Birmingham expressed his frustration that disputes brought before the WTO, while required to be resolved within 12 months, routinely took much longer.

“The processes of the WTO are intensely frustrating in terms of the time it can take to see a matter completed and resolved through all of the appeal processes,” he said.

“We share concerns about the way it has been functioning, the mission creep it has been having and certainly the lack of timeliness in terms of the resolution of disputes.”

Meat processing plant suspensions

Senator Birmingham said the suspension of four Australian meat processing plants by China was based on highly technical decisions “made as a result, allegedly, of failures in terms of quarantine or customs requirements”.

“It is extremely disappointing the suspensions occurred with no real warning,” he said.

“Our authorities are working closely with the companies involved and with the Chinese authorities to try to resolve these issues as quickly as possible.

“We have been down this path before when we had a cluster of even more processors suspended a few years ago, so we understand what is necessary to demonstrate that sound rectification plans are in place, that all the rules are being adhered to.

“We trust that when that evidence is provided to China they will respond swiftly and hopefully reinstate the licences for those processing facilities.”

Indonesia trade opportunities

On a positive note, Senator Birmingham said the Indonesia-Australia trade agreement to come into force on July 5 would be a great boost for Australian agriculture.

“It will allow more than 99 per cent of Australian exports to Indonesia by value to enter duty free, or under significantly improved preferential arrangements,” he said.

“Some examples are 575,000 head of live cattle will be able to enter Indonesia duty free in year one. 500,000 tonnes of feed grains will be duty free in year one. Indonesia is committed to guaranteeing automatic issuance of import permits for live cattle, frozen beef, sheep meat and feed grains.”

 

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