Topics: Australia-China trade relationship





Simon Birmingham:     Thanks, thanks very much for coming along today. We’ve seen further deeply disturbing and concerning reports out of China in the last 24 hours in relation to Australian exports, and particularly as it relates to exports of Australian coal. Our government is very, very concerned that these reports in Chinese state-owned media about alleged meetings of largely Chinese state-owned companies suggesting that they would in some way boycott and discriminate against Australian product going into China could constitute a breach of China’s commitments to the globe in terms of their membership of the World Trade Organization, in which they are committed to operating in accordance with good market principles, as well as their commitments to Australia in relation to the agreements signed as part of our free trade pact between one another.


This is yet another instance of accumulative series of events and actions that Australia has faced throughout, particularly the course of this year, but dating back over a couple of years now. This cumulative series of actions has prompted us to call it out and to raise our concerns publicly here in Australia, directly of course with China through all of our diplomatic channels available to us, and ultimately, to already do so at the World Trade Organization. We intend to continue to pursue every avenue, to defend the rights of Australian businesses, to trade in a manner consistent with the undertakings China has made to Australia and to the rest of the world.


These actions don’t just have impacts in relation to Australia’s trade, but ultimately they have flow-on impacts in terms of if China is shifting from using Australian coal to coal from other producers around the world. Well that’s a detriment in a range of different ways to Chinese production. Australian coal is around one and a half times more efficient in terms of energy production than most other competitor nations, including Chinese domestic coal. That means that to get the same level of energy generation, China will end up having to use more coal from other sources and generate more emissions from those sources, which will do anything but help China in terms of meet some of the commitments it’s made to the world around emissions reduction as well.


These actions, if true, would potentially constitute discriminatory action against Australian producers, potentially constitute a breach of the type of undertakings that China has made to Australia and to the world in relation to their trade practices, and potentially harm China’s ability to meet the other types of commitments it’s given to the world in relation to its emissions profile.


Altogether, we will continue to work as hard as we can to defend Australian industry, but also to work with Australian industry to diversify. In terms of our coal exports, it’s important to recognise that although China is a significant market, it’s not our largest market and we do have significant markets in Japan, in the Republic of Korea, with India, strong growth recently in relation to Vietnam, and so we continue to work in a range of other markets where our government has secured trade agreements or continues to deepen trade ties to make sure that all of those exporters can have as many choices available to them as possible in relation to the distribution of their products.


Question:         Have you any reason to doubt the reports that China has directed power plants not to import Australian coal?


Simon Birmingham:     Well look, I tend not to believe everything that I read in Chinese state-owned media, but we have seen a pattern of disruption in relation to Australian trade with China generally. It is well documented that a number of vessels have been delayed in terms of offloading Australian coal into China for a considerable period of time. Now that product has, in most cases, already been purchased by Chinese companies, and Australian businesses have ordinarily been paid for it at the time it’s loaded onto those vessels in Australia. But nonetheless, those delays have a disruptive impact in terms of future flows, and so we can see a level of concern, regardless of the accuracy of these meetings, but these reports would only heighten that concern.


Question:         You previously said that China’ actions appear to be discriminatory. You flagged some concerns here now. Would you be willing to take China to the World Trade Organization in relation to coal?


Simon Birmingham:     Australia continues to reserve all of our rights across all different sectors when it comes to the handling of these issues. We do have to make sure that we have the facts behind us when it comes to undertaking WTO challenges. And the different types of disruptive actions that China has undertaken this year are of a nature where Australia can see clearly legal avenues and processes in terms of potential WTO challenges in cases like barley and wine, where China has implemented anti-dumping duties and the like. There are other sectors, such as in fisheries, timber and the like where China appears to be using regulatory mechanisms to disrupt trade. And then there are others, such as what we’re seeing in the resources sector, which are more about a disruption through use of state influence with different companies and businesses. And, clearly, they are somewhat more opaque in terms of the potential practices that are being deployed there, but we will seek the get to the bottom of this. The easiest way for China to deal with this is to simply make clear that it’s not true and to allow trade between Australian businesses and Chinese businesses to be conducted according to the type of market principles that China has agreed to engage in. Ultimately, Australia has long been clear and consistent that we have welcomed China’s economic growth, that we value being a partner in China’s economic growth, that we continue to wish to be a partner in that regard and to support that future growth of China’s economy, and that we remain willing to engage in dialogue to resolve these issues together, and that we urge China to clarify them, to reject the reports that have been made, to ensure that businesses engage on a commercial basis and to sit down and work with us in relation to the issues, so that we can avoid the types of legal processes like the WTO.


Question:         On that and barley tariffs, when will the government lodge a formal complaint in relation to barley tariffs? And are you worried about the potential retaliation from China?


Simon Birmingham:     Finalisation of our approach in relation to the barley case is imminent. We’ve had extensive consultation with industry. We’ve been working within Government to build the strongest possible case in defence of our industry which, frankly, is pretty easy to build because Australian grain growers and farmers aren’t subsidized, they don’t dump their products on global markets and we clearly have the evidence to mount a strong case in that regard.


The view is that Australia defends the international rules-based order. We think it is important in terms of trade that it occur globally according to a set of rules that can give investors and businesses confidence in terms of how they about act. And logically, if you think those rules are important then you ought to be willing to call it out when necessary and use those rules and call in the independent umpire at the right time. So we’re, we’re close to making a final decision in that regard and that’ll be announced imminently.


Question:         Just one or two more from me on iron ore as well. Are you aware of any Australian miners who’ve sort of have been called in for a please explain about the, the high price of iron ore?


Simon Birmingham:     I’m not aware of any particular businesses who have faced that. The reports in that regard relate to industry bodies or associations in China expressing their concern about the prices. But ultimately, prices of commodities like iron ore respond to the basic economics of supply and demand. And the supply from other parts of the world has been disrupted this year, demand has spiked at particular times and of course that impacts on commodities prices, as it always does.


As a Government, we budget quite conservatively when it comes to the type of prices and volumes we expect for commodities like iron ore, and indeed, we do that because we recognise that there are significant market fluctuations. And though prices may be high right now, they’ll probably will be lower at some stage again into the future.


Question:         Certainly, you’re not aware of any cases where Australian miners are sort of, you know, pressure’s being placed on to explain prices? And just tacking on to that, you know, how foreseeable could it be that China might halt the importation of iron ore?


Simon Birmingham:     No. Look, we’re not, we’re not aware in that sense, and look, it is, again, a matter for China. But clearly, China, if they are being true to the commitments they have made, they should allow Chinese businesses – be they state-owned or otherwise – to operate in a manner consistent with market principles in terms of choosing who they buy from, consistent with the rules of the World Trade Organization and the agreements that China’s entered into, such as their FTA with Australia.


Question:         Minister, thanks very much for your time this morning. You know, you mentioned you’d had difficulty to actually verify whether it’s taken place or not. But is China’s now treating us with contempt by dealing with this directly through the tabloid state run newspaper?


Simon Birmingham:     Look, it’s, it’s certainly unacceptable to see the circumstance where governments, businesses find out about decisions of other businesses or other governments purely via media outlets. I can assure everyone that when the Australian Government makes decisions that affect other governments, we work through the proper diplomatic channels to inform those governments, and we do so in a manner that is respectful and appropriate in terms of the nature of the dialogue that should exist between governments and we would urge others to apply the same courtesies.


Question:         Minister, could I just ask you this? For months we’ve been talking about these issues of whether there have been trade disputes, go slows because of environmental issues or, at any other type of reason the Chinese customs, the Chinese Government has thrown up. The fourteen grievance released by the embassy, does this now lift the veil? Is this all about decision, in your view, decisions taken by the Australian Government?


Simon Birmingham:     Well, it’s a matter for China to speak plainly about what is driving its behaviour. The Australian Government has been consistent in all of our approaches. We are consistent in defending Australian values, Australian norms and Australia’s security and interests. We’re also consistent in respecting and upholding a rules-based system in relation to global trade, encouraging multilateral cooperation between and among countries and it’s on that basis that we would contend we haven’t changed, we have been consistent in all of our approaches.


We urge China to apply the same degree of consistency to the undertakings it has given through CAFTA, through the WTO, to make sure that it is willing to engage in the type of respectful dialogue. And if they have issues that they want to talk about, well the best thing to do is to talk about them. Not to have anonymous drops to journalists from an embassy, but to actually communicate government-to-government, minister-to-minister.


Question:         Thank you, Minister.


Simon Birmingham:     Thanks guys. Much appreciated.