Australia-China trade tensions: The method forward

Australia-China trade tensions: The method forward

Australia-China trade relations post COVID-19

Mon 6 July 2020 – 6: 12 am

Specialist| Featured

By Loren Webb

Australia requires to think about how to enhance relations in the region so it benefits from trade in a COVID-19 world, states Professor Heng Wang, co-director of UNSW Law’s China International Organisation and Economic Law (CIBEL) Centre.

The way forward for trade in between Australia and China is through the Regional Comprehensive Economic Partnership (RCEP) alongside the World Trade Organisation (WTO), states the specialist in trade law.

Prof. Wang says dispute settlement through the WTO can take several years and even then it does not constantly run efficiently.

” So, the RCEP is a valuable opportunity for Australia to involve countries in the area consisting of China, and to engage in strategic methods to construct predictability, while likewise separating trade from geopolitical and other characteristics.”

Prof. Wang’s observations followed China treked tariffs on Australian barley by about 80 per cent for the next five years and banned beef imports from four of this country’s biggest abattoirs.

More recently China has increased tariffs on Australian beef from less than 5 percent to 12 per cent for six months, and is anticipated to increase tariffs on entire milk powder later this year.

” Legally-speaking, China argued Australia had actually been discarding the barley and providing aids, so they put limitations on them under the anti-dumping responsibilities and countervailing duties,” Prof. Wang states.

” But Australia disagreed with China’s position … [The trade cuts are] a lose-lose situation due to the fact that this means barley imports are more costly which is most likely to also have effect on customers in China.”

And although there are constraints on barley, beef and shared pressure on the services sector, such as tourism and education, Prof. Wang says, “iron ore, coal, and air energy exports from Australia to China are up, therefore is the demand for Australian beef”.

No strong mechanism to handle trade conflicts

The tensions show the larger concern of there being no “significant or strong system to attend to the trade disputes between Australia and China.

“[Australia and China] ought to seize the chance to sort out these issues through the RCEP which will provide a 3rd adjudicator to resolve these disputes, due to the fact that bi-lateral free trade contracts between the two countries are extremely difficult to cool off trade stress.”

The RCEP is the only big Open market Agreement (FTA) body through which China is negotiating with other countries in the area, Prof. Wang says. ” And because that is a large FTA, then it is simpler to diversify, or to lower the tensions, and to discover an objective service amongst the RCEP’s more than 10 nations.”

But the issue is that the RCEP, unlike some larger FTAs, has not developed numerous innovative guidelines like those handling the present tensions in between Australia and China on trade remedies, Prof. Wang states.

” For example, the North American Free Trade Arrangement and United States– Mexico– Canada Contract provide for binational panels to evaluate a party’s decisions on dumping and anti-subsidy tasks, which can need domestic agencies to redetermine these problems.”


” If they do not truly have any new rules about how to handle new problems, like the trade stress in between Australia and China, or the concern taking place in information and other new areas, then they’re unable to profit of the free trade contracts,” he states.

” This is a chance that ought to not be missed, due to the fact that there are no other arrangements between China and other countries in the foreseeable future.” There is a great deal of unpredictability about whether China will join the Comprehensive and Progressive Agreement for Trans-Pacific Collaboration.

WTO sub-committee to regulate trade relations

Another option Prof. Wang recommends is through more exploring a smaller off-shoot group from the WTO.

” The WTO has 164 members, so it’s not possible to have all of them concur on the guidelines.

” It is essential to construct confidence and predictability in trade relations, due to the fact that reasonable options in trade helps to make the economy more competitive, and you’re then able to get more affordable and higher quality supplies, if whatever goes efficiently.”

‘ And trade guidelines also address concerns like the assistance to sectors adversely affected by trade liberalisation,” Prof. Wang states.

To lower Australia’s economic interdependence on China

Partner Professor Fengshi Wu, an expert in Chinese state-society relations, states China’s increase as an international power is not set in stone, which exploring choices for trade in other places is something Australia ought to likewise think about seriously.

” Because the onset of COVID-19, the American federal government has made a considered effort to discourage US business from maintaining an existence in China,” she states.

” Federal Governments [including Australia] could play a role in making their own global company relations weaker in order to lower financial interdependence.

” After a years there might be an accumulative effect, then China might no longer be the number one trading partner for Australia,” she states. “It’s possible to alter that economic and trade reliance on China. It’s not repaired.”

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Australia-China trade relations post COVID-19
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Australia-China trade stress: The way forward

Australia requires to think of how to strengthen relations in the area so it gains from trade in a COVID-19 world, says Professor Heng Wang, co-director of UNSW Law’s China International Organisation and Economic Law (CIBEL) Centre. The way forward for trade in between Australia and China is through the Regional Comprehensive Economic Partnership (RCEP) together with the Read More …

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