Topics: China to review sanctions on Australian barley

10:10 AM AEST
Saturday, 15 April 2023


Michael McLaren:  Now, on Tuesday afternoon, we had the Foreign Affairs Minister, Penny Wong, announced that China had promised to conduct an expedited review of the tariffs over the next three months and that in return, Australia would temporarily suspend its World Trade Organisation action over that same period. Now this just comes days after the WTO was due to hand down a finding on the dispute and it’s believed that the panel would have been backing Australia. So, you’ve got to say, given that, is this a case of making a sensible compromise or is it the Government bowing down to the Chinese government for fear of recriminations if those WTO findings go against Australia? Shadow Foreign Affairs Minister Simon Birmingham has come out this week saying the announcement warrants cautious optimism. He joins us on the line right now. Thanks for your time.


Simon Birmingham: Good morning. Good to be with you.


Michael McLaren: Well, and also when I say your role as the Shadow Foreign Affairs Minister, I mean, you were the trade minister for a while as well. So one of the, I guess, members of the opposition very firmly across this area of policy.


Simon Birmingham: Well, indeed. I was the trade minister in fact, at the time, these tariffs were put in place by China on Australian barley and also on Australian wine. These tariffs were completely unjustified and unwarranted, and they do effectively amount to a form of attempted economic coercion. And Australia should be very proud of the fact that we have withstood that as a country. We made sure that we held our policy nerve. We continued to look to our national interest and it’s critical that we continue to do so as a government. At the time we used the independent umpire, we called in the World Trade Organisation and funded a legal appeal against China’s actions. Having great confidence that we would be successful in such an appeal and you’re right. China was staring down the barrel of the first of those cases, releasing its findings in relation to barley, and they’ve now struck this deal with the Albanese Government. We give it a cautious welcome because in the end, even if the WTO finds in our favour, China could still drag a process out for a considerably long period of time hurting our farmers. And so really the test of whether this is a good deal for Australia is going to be whether in a few months’ time as China concludes its process, they actually come to the party, lift tariffs on Australian barley and remove them also on the Australian wine industry, because we shouldn’t have to go through a similar drawn out process for that sector which is feeling the squeeze as a result of China’s actions.


Michael McLaren: Do you see it as a bit of a balancing act there or as I mentioned in the introduction, that, okay, it’s good for our producers and we’ve got to look after them, it’s good for the Australian economy. But in the longer term, does it not really address the issues that led to this?


Simon Birmingham: Well, I think if China do back down and remove these tariffs, it will be a demonstration that they were, in effect, acting, as I called it, out before, in an attempt of economic coercion and that these tariffs were not remotely justified in the first place. But there are certainly lessons here for Australian industry and producers, and that is to make sure that we diversify as much as possible. When in government we didn’t just strike a trade deal with China, we also made sure we got free trade agreements to open up Australia’s market access to Japan, to Korea, to the United Kingdom, to India in the closing months of our time in government and enhanced deals to a range of South East Asian nations and to Canada and to Mexico through the Trans Pacific Partnership. And all of that was about providing means for Australian business to make sure they have a diversified suite of where they send their products. So that we are as strong and resilient as a country as we can be. Of course, China is a huge, huge market and it is geographically proximate to us, so we’re never going to not see trade there, but we do need to spread that risk.


Michael McLaren: Yeah, I mean, you mentioned there about whether it would be drawn out had we not go down this path. China does have a bit of a mixed history of compliance, doesn’t it, with WTO rulings?


Simon Birmingham: It does. And of course, the whole reason we’re able to take this case forward is because China is acting in breach of the commitments that it made to the World Trade Organisation and also the commitments it made to Australia through our free trade agreement with China and through other agreements that we have with them. So this is a salutary warning in terms of the way in which China can act and put a higher risk premium in terms of doing business with China. But ultimately we want a peaceful and cooperative relations with China as we possibly can have. So, it’s certainly in Australia’s interests if China is willing to talk and work cooperatively to step through those processes, as long as we don’t compromise on our principles at all.


Michael McLaren: Know what you’re saying though about the lessons to be learnt here. So, if you’re a barley producer or a wine producer, you’re going to be very wary about being reliant too much on China, aren’t you, as your sole source or even a major source?


Simon Birmingham: You would expect to be going forward, particularly products like wine. Barley is more of a tradable commodity and of course it’s an annual plant. So, Australia’s cereal farmers and grain growers were able to pivot, to plant slightly different crops. They may not have got the same premium they were getting for high quality malting barley going into China. And so, if we can reopen that market, that’ll be good news for Australian farmers and also for Chinese beer drinkers- where our barley used to go. Yeah, but wine is mainly getting to China as a branded product. It doesn’t have the same ease then of shifting that high value branded product from one market to another. And so those sorts of sectors need to be very careful about just how exposed they are to any one market, but particularly one where government interference can change the market economics in a very, very short time frame.


Michael McLaren: Why do you think it is that barley has been selected as the first industry? Is it because of the particulars of the case before the WTO?


Simon Birmingham: Although in some ways hard to tell, but I think- hard to prescribe sort of what the motivations for China were in terms of selecting the different industries there. Remembering that these were the direct to tariffs and sanctions applied against Australia, but they also did a range of indirect sanctions that hurt our meat industry, hurt our live seafood industry, our timber industry, our resources industry. And so, through a whole range of less direct ways, they also sought to apply pressure. But that’s why I think we should be very clear that the country that we withstood that pressure, I give credit so far to the current government that they have maintained all of the policy settings of the coalition. We put in place stronger foreign interference rules, stronger foreign investment rules, decisions in relation to the telecommunications network to ban Huawei, things that did irritate China and did lead to them taking these types of actions. We certainly were never going to back down. The new government has maintained those policy settings for now. The test on them is to make sure that talk gets a genuine outcome that sees all these tariffs lifted and that they still show the same strength of resolve and willingness to take the principled stance in the national interest that we took, even if it is going to irritate China.


Michael McLaren: Just before I let you go on another issue still under your portfolio, and that’s to do with NATO. In fact, I’ve had an email while we’ve been chatting. Simon, Christine, who’s emailed in saying, could you please ask Simon Birmingham about the PM not going to NATO? This is the NATO summit in Lithuania. Well, we got a glitch there.


Simon Birmingham: -still hesitated when it come to committing to attend the NATO Leaders’ Summit.


Michael McLaren: So I’ll just ask you that question again, because we did get your phone drop out. I mean, what do you have to say about the Prime Minister or Penny Wong, for that matter, not going to NATO?


Simon Birmingham: Sorry about that. I find it deeply concerning that the Prime Minister has at the very least equivocated in relation to whether he’s going to go to NATO. Reports were he’s not attending. He now says they’re still looking at the diary. Well, it should be a slam dunk. Yes. For him saying absolutely, I’m going. And why is that? Well, it’s because this is the one opportunity for us to have security dialogue with European democracies all coming together. We have lots of dialogue with the United States, lots of dialogue with the United Kingdom. That’s all critical to us. But to get all of the European democracies together as they effectively are under the NATO umbrella and have the opportunity for them to talk to our region. [Inaudible] interesting in having what they call the AP4 the Asia Pacific Four – of Australia, New Zealand, Japan, Korea, participating in their NATO meetings. And we should want to embed that as a permanent resource. We also should be there with a comprehensive package of further support to Ukraine. This time last year there was a lot of outpouring of concern for Ukraine. It would be appalling to think that we are growing weary or tired of that conflict. The principles the case still remain the same and the Ukrainians have been nothing short of heroic in their defence of their country. And we should make sure we continue to provide that support. In the Prime Minister’s attendance at the NATO summit would be a really important signal in that regard.


Michael McLaren: Okay. I’ve got to leave it there. Thank you so much for your time. Appreciate it.


Simon Birmingham: Thank you. My pleasure.