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Australia “prepared to pay the economic price”

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In the trade conflict with China, Australia will not back down and is ready for the consequences, Trade Minister Dan Tehan just said in an interview in Washington. “If we have to pay an economic price for that, that’s something that we’re prepared to pay.” Relations with China – Australia’s largest trading partner – have been deteriorating for several years now.

The Australian trade minister is in Washington to meet with the Biden administration to talk about US alliance in Australia’s foreign policy and dispute with China. “We are examining ways they can help and support us. Obviously no country wants to be on the receiving end of economic coercion,” Tehan said.

Following a meeting with Tehan, US Trade Representative Katherine Tai backed Australia in trade disputes with China. According to her recent statement, the US is closely monitoring trade tensions between Australia and China and will support Canberra in addressing China’s state-led, non-market practices.

China’s foreign ministry spokesman Zhao Lijian in a news briefing rejected the US backing of Australia, saying the trade tensions were caused by Australia’s interference in Chinese internal affairs.

Investigations, tariffs, anti-dumping accusations

The Australia-China relations were already on shaky grounds after Australia banned Chinese telecoms giant Huawei Technologies Co. from its 5G wireless network in 2018. After the country called for independent investigation into Covid-19’s origins in Wuhan, the tensions turned worse. China followed with punitive tariffs on a variety of commodities, including barley, wine, and limited imports of Australian beef, coal, and grapes.

Chinese tariffs go as high as 218.4% on Australian wines, while Australian barley and other agricultural products face tariffs of up to 80.5%. June marked the sixth straight month with no Australian coal exports as Beijing authorities continued to block coal shipments.

Australia in June has challenged Beijing’s sanctions against its wines and other exports at the World Trade Organization (WTO). China in the same month launched a complaint against Australia to the WTO over wind towers and steel sinks. Previously, Australia had taken anti-dumping and anti-subsidy measures linked to Chinese railway wheels, wind towers and stainless steel sinks.

Digital trade deal on the table?

In Washington, Australian Trade Minister Tehan also talked about the US plans for a digital trade deal covering Indo-Pacific economies. As Bloomberg reported, details are not firm yet, however, along the US and Australia, countries like Japan, Malaysia, New Zealand and Singapore could be included.

The Trump administration withdraw from the Trans-Pacific Partnership (TTP) in 2017, the efforts by the Biden administration could be a step towards the US joining the pact.

“Let’s take one step at a time and create the bipartisanship for a digital trade agreement in the Indo-Pacific region and if we can take that first step, hopefully we could look at a second step, which would be TPP membership by the United States,” Tehan said.

The trade pact, renamed to Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), was originally created to counter China’s influence. However, China recently started behind-the-scene talks to join the pact.