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China’s trade tariffs could be ‘just stage one’ of broader response to Australian diplomatic tensions

China’s trade actions against Australian barley, beef and wine could be “just stage one” of a broader response by Beijing to the poor state of the diplomatic relationship, a senior Labor figure has warned.

Labor’s agriculture and resources spokesperson, Joel Fitzgibbon, has raised fears that the trade dispute with China could “get worse before it gets better” as a range of Australian industries worried they would become the next target.

The warnings came after a Western Australia-based grains exporter vowed to fight its suspension over alleged breaches of import restrictions and Chinese state media claimed the souring of the diplomatic relationship has “destroyed the atmosphere for dialogue”.

“I fear barley, beef and wine are just stage one of a strategic response to the failure of the Turnbull and Morrison governments to show it places great value on the Australia-China relationship,” Fitzgibbon told Guardian Australia.

He said the best measure of the poor state of the relationship was the inability of the prime minister and his ministers to persuade their counterparts to take their phone calls. “How do we fix this crisis while ever that remains the case?”

Fitzgibbon on Wednesday told Canberra radio station 2CC that farmers and a whole range of export industries across the country were “wondering whether they might be next”. The Hunter-based MP said he feared for the thermal coal industry in his region “if the Chinese turned it off”.

Government figures show Australia exported $7.3bn of coal to China in the first six months of this year – up 8% compared with the same period last year. The value of Australian exports of iron ore and concentrates to China rose 16% to $43bn.

Asked on Wednesday about the current situation, Minerals Council of Australia said the resources sector was “working to ensure our cooperation, partnerships and good trading relationships continue”.

The MCA’s chief executive, Tania Constable, said the relationship between the two countries was mutually beneficial, noting that Australian coal and iron ore were being used as part of China’s post-Covid-19 recovery and stimulus.

“Covid-19 has had a big impact on energy and steel demand globally, including the Asian region, which has flowed through to depressed thermal and to a lesser extent metallurgical coal demand,” she told Guardian Australia.

Constable said seaborne coal imports to China had largely stopped from all origins, including Australia, while there were “some sporadic deals being done on metallurgical coal, primarily Australian hard coking coal”.

“The stoppage follows a significant surge in imports over the first half of 2020 given Covid-19 impacts and the post-Covid-19 surge in economic activity, which has seen imports rapidly approach Chinese import quotas,” she said.

While industry sectors unaffected by the trade tensions to date have been reluctant to speak publicly about their fears, the National Farmers’ Federation has raised concerns about potential disruptions to agricultural trade, given that China is an important market for exports of Australian wool, cotton, grain, dairy, seafood and horticulture.

Last month – when Beijing launched a 12-month trade investigation into Australian wine exports – the federation stepped up its calls for the government and industry to “nurture and advance” relationships with China in order to protect agricultural, mineral, tourism and education exports.

China’s General Administration of Customs said on Tuesday it was suspending barley imports from the WA-based CBH Group – the biggest cooperative in Australia – because of the discovery of “quarantine pests” in recent shipments.

The Global Times, a Chinese state media outlet, then amplified the views of a researcher at the Chinese Academy of Social Sciences who described the suspension as “a sign of deteriorating ties between the two countries as there could be other, gentler ways such as talks to solve this kind of issue”.

The impact of the latest step may be limited, however, given that China had already introduced steep tariffs on all Australian barley exports to China from May onwards, which had made the trade uneconomic.

Australia’s agriculture minister, David Littleproud, said the government was working with the exporter and Chinese authorities to resolve the matter.

“We take very seriously the quality and safety of our grain exports and have world-leading regulatory controls that underpin the integrity and safety of our products,” Littleproud said.

CBH Group said it had not found any evidence to support the claims “that several CBH barley cargoes, that had already been discharged in China, did not meet phytosanitary requirements”.

Jason Craig, the chief marketing and trading officer, said the cargoes “were all retested and it was confirmed that all cargoes met Australian government phytosanitary export requirements”.

“CBH is therefore extremely disappointed the suspension has been put in place and will continue to work with the Australian government to challenge the suspension.”

The government is expected to introduce legislation to parliament on Thursday outlining new powers to cancel state, territory, local government and university deals with foreign governments that are deemed to go against Australia’s national interest.

Officials from the Department of Foreign Affairs and Trade told a parliamentary hearing on Wednesday they had been working on the legislation for about two months and it was designed “to ensure there is a uniform approach” consistent with Australia’s foreign relations interests.

However, universities say they were blindsided by the move, which was not flagged in the dedicated taskforce to counter foreign interference in the sector. There is also disquiet in Labor ranks about the potential reach of the new laws and the opposition is considering moving an amendment to force the unwinding of the sale of the Port of Darwin to a Chinese company.

The Dfat secretary, Frances Adamson, said in a speech on Wednesday that Australia needed to “stand firm” in the face of challenges to its national interests as the Indo-Pacific region had become more “contested and polarised”.

She said China was “not standing still” and tensions between Beijing and Washington had “increased on almost every front”. Australia’s own relationship with China was “more complex than ever” but had “never been more consequential to our national interests”.

Read the original article at The Guardian

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