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  • Troy Clayman

Trade Re-Opens Between Australia and China Following Cold Relations



On February 6, the trade ministers of both Australia and China reopened trade negotiations. This marks the first meeting since 2019, after which China closed most of its trade with Australia early in 2020 following Australian requests for independent international inquiries into the origins of the Covid-19 pandemic, among other ongoing disputes such as interference in domestic politics and human rights abuses. The recent dialogue between the two nations represents a potential thawing to the cold relations that have developed following Australia’s old remarks.


The last meeting in 2019 originally addressed different concerns than what ended communication between the two countries. On November 3, 2019, then Australian Prime Minister Scott Morrison held a 45 minute meeting with the People’s Republic of China Premier Li Keqiang to reaffirm both sides' commitment to continuing trade together. This recommitment to open trade together was necessary due to strained relations following senior ministers calling out Chinese human rights abuses and foreign interference. To further reinforce the message of enduring trade relations, then Trade Minister Simon Birmingham attended the China International Import Expo (CIIE) in Shanghai along with 200 Australian companies on November 6.


Amidst the rise of the novel coronavirus, at the very start of 2020, China initiated both official and unofficial trade restrictions to prevent Australia from formally requesting an international inquiry to investigate the origins of the coronavirus. Such a request, despite China’s ambiguous explanation of the origins of the pandemic, insinuated that either the Chinese officials were lying or intentionally misleading. After the trade restrictions failed to dissuade Australia from requesting such an inquiry, they were left in place as an enduring punitive measure on Australia’s exports. The restrictions were left as a direct message to Canberra that trade could not be conducted until sufficient political demands had been met.


At the end of last year, Australia and then China submitted complaints to the WTO over the ongoing trade disputes, hoping to have them arbitrated by an independent panel. Australia’s complaint was concerned with the ongoing tariffs and trade sanctions imposed by China on Australia’s goods. These restrictions blocked or heavily limited Australian exports, primarily in the wine, coal, beef, seafood, barley, and wood industries. China, on the other hand, claimed that the blocked Australian goods were being subsidized and then dumped on the Chinese market, thereby hurting their industries. This story differed from China’s original messages to Australia, stating that the blockages were on political terms.


The ongoing trade disputes are estimated to have cost Australia US $14 billion a year. While the economic cost to China is unknown, one effect could be seen in China’s recent issues with widespread and ongoing power outages and rising costs of coal. However, rather than letting the WTO panel decide, a process that could take up to 15 months, both sides agreed to a meeting to potentially ease restrictions on Australian imports.


China removed its diplomatic freeze with Australia, which had previously prevented negotiations on the matter, following the election, which saw the Labour Party led by now Prime Minister Anthony Albanese come to power in May. This indicates that until now, China was unwilling to negotiate with Scott Morrison’s Liberal Party led coalition government. While the meeting occurred behind closed doors, Trade Minister Don Farrell reported that he and his Chinese counterpart, Wang Wentao, had agreed to renew the dialogue to reestablish trade relations between the two states. As a sign of the renewed dialogue, the first shipment of Australian coal reached Chinese ports.


This a welcome change for both sides amid the ongoing tensions in the region; both hope to reestablish trade relations and repair damage done to their economies both in the interim and due to the coronavirus pandemic. While the potentially renewed trade does not solve the original disputes, nor the ones not mentioned, there are at least now paths to their resolution with the reopened diplomatic avenues.


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