Topics: Economic relationship between Australia and China
Graeme Goodings: Well, there’s no doubt that China has been a wonderful market for South Australian and Australian goods for many years, a reliable market, a big market. All that seems to have changed in recent times, and many of our products, translating to billions of dollars, are under threat, not the least of which is the wine industry. Joining you now is Federal Trade Minister, Senator Simon Birmingham. Simon, good afternoon.
Simon Birmingham: Hello, Graeme. Thanks for the opportunity.
Graeme Goodings: This is a very real threat to our wine producers, isn’t it?
Simon Birmingham: It is very significant impact potentially for our winemakers, and of course for the grape grower as we look ahead to the vintage next year and the likely flow-on implications. China is by value the largest export market that we have, and we do ship more volume in some other markets, but indeed all of that highlights the madness of the claims that China has made in that regard – that our product into China is actually on a price-per-litre going in at a higher rate than what we send product to across the rest of the world. So far from dumping product into China markets, we actually send our premium product and charge premium prices into it, what makes it so disappointing that they have made these claims and applied these tariffs on what they claim to be on the basis of dumping or subsidy, which clearly is not true.
Graeme Goodings: It’s not only the wine that’s been under threat: there’s sugar, coal, lobster, barley, copper. This is a thinly- not even a thinly veiled threat. This is a threat- this has got actually nothing to do with the products and their viability and their sustainability, has it?
Simon Birmingham: This is an accumulation of things, you’re right, that has come about not even just during the course of this year, but over the course of a few years now, as different tensions have grown in the way in which China has sought to use trade seemingly as a weapon or tool in different ways. And that is deeply concerning. We welcome the fact that China has become a more prosperous nation that has lifted people out of poverty, that it’s given longer lifespans, better education opportunities, all those wonderful things that have happened in recent decades. But it has also come with the Chinese President and his administration becoming more assertive in other ways around the world. And of course, countries like Australia who have strong values, democratic system, want to make sure that we hold true to those values and those systems at these times.
Graeme Goodings: This seems to have spiralled since Australia called for an investigation into the Wuhan coronavirus outbreak?
Simon Birmingham: Look, that’s one matter during the course of the year, but these are issues, if we look at the barley sector, the similar anti-dumping actions were commenced against Australian barley a couple of years ago now. So some of these issues have been ongoing for a while. And yes, there’s been an escalation during the course of this year. Around one week ago, we saw the Chinese embassy in Canberra allegedly release a list of 14 grievances that they claim to have with Australia. It’s certainly not the way our embassy in Beijing goes about its operation. But I would say in relation to that list [indistinct] like the way we assess foreign investment in Australia and why we protect our critical infrastructure, our national security laws and the like, and of course, none of that is going to be changed by the Australian government on the concerns or demand of any other nation. We remain a country that is open to foreign investment, but we reserve the right to say no where we deem it not to be in the national interest. We rightly protect our critical infrastructure and our national security interests, just as any other nation, including China, does. And what ought to happen at a time like this is that though there may be occasional differences of opinion on those sorts of issues, governments shouldn’t be getting in the way of our people, our businesses, continuing to trade, because that’s going to be one of the most important aspects of the COVID economic recovery across both our countries and many others across the region.
Graeme Goodings: It’s good to see the Australian Government not buckling under, but what does China want?
Simon Birmingham: Well, that’s very much a question for China, and it’s been a disappointing thing in many ways is that the first thing that China seemed to stop was the ability to sit down and talk, to have dialogue. We’ve made very clear that Australian Government ministers like myself would welcome the opportunity to sit down with our counterparts. We’re not going to change on those issues like national security, but we are more than happy to sit down and talk to work through difficult issues that there may be, try to find pathways and to focus on the areas of mutual benefit and agreement. And it’s disappointing that China and their ministers are refusing to come to the table and declining those invitations at this time.
Graeme Goodings: On the matter of the Wuhan call for an investigation, there are a lot of people who’d say: why did Australia stick its head up? We’re only a small player in the whole thing. Why did we have to lead the vanguard? Why didn’t we leave it to the big players?
Simon Birmingham: Well, it wasn’t that we necessarily led the vanguard. The motion that we supported was, in fact, a European Union motion that went through the World Health Assembly and was supported by virtually all countries, including ultimately China. In our system, a democratic system with a free media, our leaders were asked questions about whether we supported such a motion and such action. And of course, clearly, we did. And we obviously would do so again if need be, because I think all countries around the world deserve to know that after this terrible pandemic and the disruption of this year, we take stock, learn the lessons and are better placed for the future on how we prevent a repeat of this happening again or are better placed to manage it if it happens again.
Graeme Goodings: It must be reassuring that many countries around the world have backed Australia’s stance.
Simon Birmingham: Well, indeed. Look, as I say, it had overwhelming support when it came to the ultimate resolution moved by the EU and supported by the vast majority of the world’s countries and supported by China ultimately as well, and we welcome that.
Graeme Goodings: You’re now- it appears to me that you’re willing and ready to sit down and talk with the Chinese. So the next move is in their hands. Is there anything we can do?
Simon Birmingham: Graeme, that is one of the challenges, there. The ball is pretty much in China’s court. These trade actions that they are taking against Australia are China’s decisions, China’s actions, and only they can choose to reverse those actions. We’ve made clear that we are willing to engage in dialogue, sit down and come to the table, but only China can agree to join us in those conversations, and we urge them to do so. We will absolutely use the tools of the World Trade Organization to try to resolve matters or challenge some of these decisions where we can, but they are long processes, and we would far rather they be resolved through dialogue. We’ve used WTO processes with other countries before, including Canada quite recently on another wine industry matter, and whilst we started that process through the WTO, we ultimately resolved it through dialogue and cooperation and conciliation between the two. And we would like to see similar approaches deployed with China.
Graeme Goodings: Whatever the outcome with China, and we hope it’s positive, have we learnt a lesson here that we are too reliant on China for trade?
Simon Birmingham: I think for Australian businesses there is a lesson out of the challenges of this year, and that is that the risk of trading and doing business with China has heightened and grown and that people do need to look at how they balance that risk. And our government doesn’t determine with whom business trade. We’ve gone about the business of government of opening up trading opportunities with a lot of countries during our time in government. And in doing so, if we take the wine industry, for example, our trade agreements didn’t just eliminate tariffs for the wine industry to grow China, they eliminated tariffs for the wine industry in relation to Korea, the USFTA eliminated them in the United States, our ASEAN and Singapore FTA eliminated [indistinct] Singapore. Our Japan FTA will eliminate wine tariffs [indistinct]… Japan next year. And so they all provide real growth opportunities in other markets, and that is certainly what we’re determined to try to create those opportunities and then encourage businesses to seize upon them.
Graeme Goodings: Do you think manufacturers should have seen this coming or something like it? Putting all the eggs in one basket, I mean, any market can turn sour for one reason or another. But if we’re doing the bulk of our trading with one country, we’re seeing the downside of that.
Simon Birmingham: For any business, these are very much a question of how you balance reward versus risk. And obviously, the reward of the Chinese market is very large, very large, middle and upper class that it is willing to spend on premium products, is a very big reward. So I understand why businesses have gone after that. But this year, we’ve seen very clearly that the risk profile has grown as well, and that’s where business decisions, commercial decisions, the company will need to weigh the fact that the rewards may be great, but the risks have heightened. That is a challenge that China now faces, not just with Australia but other countries, other businesses around the world, will look at these types of decision and also see a much higher risk in doing business with China in the future too.
Graeme Goodings: Is China sensitive to the rest of the world? I mean, it is apparent from where we sit that the bulk of countries around the world think China is doing the wrong thing, but are they likely to succumb to pressure?
Simon Birmingham: Look, we will have to see. We have a very challenging global landscape now, and the strategic rivalry, the great power rivalry between the United States and China is something that all nations are going to have to grapple with. Obviously, many nations have seen increased concern, but not just in Australia, where Chinese diplomats have spoken with perhaps a lack of diplomacy or where trade sanctions have been deployed at times. So the types of concerns that we’re discussing have certainly grown in other nations, and I think if China wants to secure the strongest economic growth for itself in the future and recovery from COVID as well as for its trading partners, as well as for the region, for the whole world, then it would be far better placed to desist from these sorts of tactics that just undermine trade and global economic confidence, and it will make that recovery that much harder.
Graeme Goodings: It has been said in some circles that instead of just sitting back on our hands waiting for China to react, that we could retaliate. We could cut off our iron ore supplies to China. Is that even conceivable or a feasible way of looking at it?
Simon Birmingham: Well, we are a market economy, and we’re a free country where, as I say, Government doesn’t decide who sells to China and nor in the main do we decide who people don’t sell to. There are extreme times in relation to certain matters that we impose economic sanctions, but in the main, we allow Australian companies to choose to get out there and trade and engage with the world, and they do a damn fine job of it. For something like 33 of the last months in a row now, we have exported more as a country than we’ve imported. Our businesses get out there and take advantage of the trade agreements that our government has struck, and they’ve grown the export volumes as a result of that. So I think we do need to make sure that we continue to encourage that freedom of choice amongst our businesses, and we’d want to be very cautious about those types of actions that saw the Australian Government suddenly seeking to tell Australian businesses, in this case mining businesses, who they couldn’t sell to.
Graeme Goodings: Would the Government support companies looking for other export markets?
Simon Birmingham: Indeed, and we have certainly done a lot of work, not just in terms of the trade agreement, securing the agreement that came into force a little while ago with Indonesia, another new regional agreement that opens up further access across Southeast Asia. The negotiations we’ve got underway with the European Union and the United Kingdom to improve access to those markets. But also we have a network of Austrade advisers and staff, as well as our embassies and high commissions across the world who are all very much focused on the economic diplomacy task of finding new opportunities and new trade for Australian businesses. That is business as usual for them. That’s what they’re all expected to do all of time, but clearly, issues like this give greater focus to how you help a sector like the wine industry secure alternate contracts in other markets.
Graeme Goodings: So regarding China, though, we’re powerless to do anything at this stage? It really is in China’s hands to come to the negotiating table?
Simon Birmingham: Well, that is largely… as I said before, Chinese decisions taken by the Chinese Government, only they can ultimately lift them. We’ll use World Trade Organisation and other levers where we can, and we emphasise again and again that the Australian Government is willing to come to the table and engage, and we call on our counterparts to do likewise.
Graeme Goodings: Simon, good to talk to you today.
Simon Birmingham: Thanks, Graeme. My pleasure.
Graeme Goodings: Senator Simon Birmingham, Federal Trade Minister.