• Transcript, E&OE
Topics: China’s tariff on Australian barley; Discussion on opening state borders.
19 May 2020

Neil Mitchell: Now there are two elements to what happened overnight. One, China has offered $2 billion to the world once- an inquiry once the pandemic is over. One of the things they say though will fund is social development which worries the hell out of me. Sounds like a new version of Belt and Road. However, the other thing was the tariff went onto Australian barley, 80 per cent tariff, which could drive some farmers to the wall. It does look like economic intimidation. It’s been- the debate’s been going on for five years but it’s a stupid debate, a factious debate, it really is.

On the line is the Trade and Tourism Minister Simon Birmingham, good morning.

Simon Birmingham: Good day, Neil. Good to be with you.

Neil Mitchell: Are farmers been duded?

Simon Birmingham: Yes. Look, they have been. We’re deeply disappointed by this decision that’s happened in Beijing overnight. It applies a significant extra duty or tax effectively to Australian barley if it is sent to China. There’s no justification that we can see for that. Our barley producers, our farmers, as everybody knows, operate without big government subsidies. They operate without Government subsidy effectively at all. They simply are some of the most productive and best farmers in the world and that’s why they’re able to produce high quality grains at affordable prices and get them into markets like China historically. And we’ll continue to defend their integrity and look at how we can respond to this.

Neil Mitchell: Could this send farmers under? Send them to the wall?

Simon Birmingham: Our farmers are pretty adaptable Neil, and we’ve given lots of additional market access opportunities in recent years. Trade deals not just with China, but with Japan, Korea through the Trans-Pacific Partnership with Vietnam, Canada, Mexico, other countries and a new one with Indonesia that comes into effect on 5 July; provides some 500,000 tonnes of feed grain access duty free. And while that’s not malting barley, it is a new market that’s opening up for our farmers.

And so we’ll help them by trying to identify other market opportunities and make sure they adapt. But it’s a blow to our farmers and frankly, it’s a blow to Chinese breweries and the businesses in China that rely upon our high quality barley as well. They’ll end up either paying more or getting substandard product.

Neil Mitchell: If Australia had not been arguing for an independent inquiry into COVID-19 and where it started and how it was handled, would this tariff be there?

Simon Birmingham: We never know for sure is the honest answer …

Neil Mitchell: What do you think? What do you suspect?

Simon Birmingham: China’s been running this process in relation to barley for 18 months. They obviously are emphatic that it is decided on its merits …

Neil Mitchell: But what do you believe? I mean they’re not- they’re still not answering your phone calls, are they?

Simon Birmingham: No. We requested discussions between me and my Chinese counterpart. That hasn’t happened yet. Australian- Australian ministers, certainly myself, but all of my colleagues are always up to talk to our counterparts around the world even when they’re difficult discussions, even when we’re disagreeing. And frankly, we would prefer that others reciprocated in kind. If there’s a beef, let’s have a discussion about it.

Neil Mitchell: But what’s your instinct? Is this a shot across our bows or not?

Simon Birmingham: Well I think this decision and the very abrupt decision that was taken last week around four meat processes and having their licenses suspended heightens the regulatory risk and uncertainty of doing business. And that’s something I expect Australian businesses will weigh in their considerations …

Neil Mitchell: I’m sorry, I don’t understand. Is this a shot across the bows or not?

Simon Birmingham: Well Neil, that’s for commentators to debate.

Neil Mitchell: Okay. Okay. Well if you don’t want to answer it, I understand why. Fair enough. Okay. Is barley covered by the Chinese free trade agreement?

Simon Birmingham: In terms of- yes, our grains and most of our produce is but what China is using here is an anti-dumping mechanism, that is the same type of process that Australia uses on occasion through our Anti-Dumping Commission. Our dispute is not with the ability of China to use the dumping mechanism, that’s consistent with our FTA; our dispute is that we don’t think the evidence backs up the decision they’ve made under that anti-dumping …

Neil Mitchell: And the reason is we’ve been giving aid to farmers in drought and fires basically, isn’t it?

Simon Birmingham: Look, some of the arguments they make relate to the water efficiency infrastructure build across the Murray-Darling Basin which just doesn’t stack up. The overwhelming majority of Australian barley is dry land grown, mostly in Western Australia and South Australia.

Neil Mitchell: Yeah. It’s trumped up. Look, I know you probably can’t say it because you’ve got to be diplomatic but they are trumped up reasons, are they not? They are trumped up reasons.

Simon Birmingham: The reasons given don’t stack up. There’s no doubt there. We’ve provided more than 10,000 pages of evidence to demonstrate that that our farmers are nothing but efficient, not subsidised and when they send their product into China, it’s priced at market value.

Neil Mitchell: Are you concerned then that other industries could be targeted like wool, like beef, like wine, all these things?

Simon Birmingham: I sincerely hope not. And we will be monitoring all of these situations carefully. China has, this week, while making this decision, said publicly that they valued the benefits that flow to both countries from the China Australia Free Trade Agreement. So I trust they’re sincere in saying that and that they will continue to facilitate that flow of trade. China is the second largest economy in the world, by far the biggest goods market in our region. That’s what makes it our largest trading partner…

Neil Mitchell: So what’s it going to cost us? What’s it going to cost us?

Simon Birmingham: Well the barley decision, it’s about a $600 million export to China last year of barley. And so that product has to find another home around the world. Now China is not going to change its consumption of barley so of course there’s a sort of global substitution of sorts that will take place. They’ll buy barley from somewhere else in the world and our farmers will hopefully be able to fill some of those voids and that’s where we’ll work with them to help.

Neil Mitchell: What was your reaction to that speech from the Chinese President to the World Health Assembly last night?

Simon Birmingham: I haven’t looked at all the detail there. We welcome the fact that the World Health Assembly has supported overwhelmingly the decision and the advocacy of the Australian Government there be an independent investigation into COVID-19, its origin and its handling around the world. And we will continue to engage to make sure that it is a thorough and independent investigation that’s undertaken. And I hope that everybody will cooperate with that, including Chinese authorities.

Neil Mitchell: Be fair to say- well, let’s be fair to say, you have to watch pretty carefully wouldn’t it?

Simon Birmingham: Well we will watch carefully. You know millions of people have lost their jobs, hundreds of thousands of people lost their lives, the health and economic devastation is enormous and the least the world deserves is a thorough investigation so we can learn some lessons and or be better prepared to prevent it from happening again.

Neil Mitchell: No whitewash correct.

Simon Birmingham: Correct.

Neil Mitchell: Just quickly as Tourism Minister, the closed borders in Australia, that’s going to cost a lot of money. What do you think? Should- is it time for Queensland, West Australia look at opening their borders?

Simon Birmingham: The states logically need to get parts of their internal economy moving before they start worrying about their border restrictions. So get the restaurant’s operating effectively with social distancing, and get the pubs reopened with the social distancing. Those things have got to come first. But I think the Queensland Premier’s suggestion that border restrictions be in place until September is one that will cause real economic harm to their tourism industry and that’s- tourism employs one in 13 people across Australia, it’s even more than that in Queensland. And if the success in suppressing the spread of COVID-19 is maintained over the coming weeks, then there is no reason why those border controls should still need to be there in September.

Neil Mitchell: Thank you so much for your time.

Simon Birmingham: Thank you Neil.

Neil Mitchell: Simon Birmingham, the Trade and Tourism Minister.