23 June 2021
The Morrison government has decided to lodge a formal complaint with the World Trade Organization over Chinese sanctions on Australian wine exports.
The move, following a similar appeal to the WTO in December over China’s anti-dumping penalties on Australian barley exports, suggests the government is ramping up its formal response to China’s economic coercion.
Due to dumping duties of more than 100 per cent, the value of Australian wine exports to China has fallen by more than A$1 billion to as little as A$20 million a year. This represents the biggest blow to agriculture from China’s recent sanctions.
By appealing the matter with the WTO, the Morrison government may appear to have given up on the prospect of bilateral negotiations with China over the trade and diplomatic differences that have escalated over the past three years. But when he announced the WTO appeal, Trade Minister Dan Tehan said he was still ready to “sit down with the Chinese government to work out this current dispute with them”.
Foreign Minister Marise Payne acknowledged, in effect, that the diplomatic landscape has changed, claiming that the legalistic appeal process is itself “a bilateral discussion with China about the issues”.
The fact that the WTO appeals process could take up to four years provides some insight into how long the government thinks the freeze on normal Australia–China communications might last.
The government’s commitment to the process also suggests it has hope that the WTO can recover some of its credibility as a referee on trade disputes. The WTO has new leadership and no longer has to contend with an oppositional Trump administration.
Australia is not alone. China has typically supported the WTO’s role, due to the country’s dependence on trade. And last week, the Group of Seven said it also strongly backed the renewal of the WTO’s appeals system.
Barnaby and climate
The return of Barnaby Joyce as leader of the National Party, and thus deputy prime minister, has cast new uncertainty on the Morrison government’s ability to make fresh commitments on cutting carbon emissions.
While Morrison has not formally changed his government’s position, his language has subtly shifted in recent weeks, as more of Australia’s major trading partners have committed to reaching net zero by around 2050. This appeared to pave the way for a similar commitment from Australia before the United Nations’ Glasgow Climate Change Conference in November.
In his first comments since returning to leadership, Joyce said his party would collectively decide on its climate policy – but he implied it would oppose a net-zero emissions policy.
If the government’s inaction on climate change continues, it could test Australia’s new-found status as part of a group of leading liberal democracies.
That was demonstrated last week, when British prime minister Boris Johnson overstated Morrison’s position on net zero, placing further pressure on Morrison to meet international expectations.
That Morrison’s anticipated one-one-one meeting with Joe Biden did not eventuate is a possible indication of how the Australian government could be treated by the international community if it fails to meet those expectations.
The European Union is threatening to impose green tariffs on countries with inadequate emissions-reduction policies. And Australia’s Pacific step-up policy could be unsettled if Pacific island countries demand more financial assistance from the Australian government to offset its lack of action on climate change.
How the Morrison government is received at the Glasgow conference seems to depend on whether the influence of the Nationals will prevail over the influence of those grassroots farmers’ groups who want climate action.
Last week, the Morrison government announced a new visa, which would allow low-skilled workers from South-East Asia to work on farms in Australia for nine months a year.
The South-East Asian worker scheme was hastily announced to calm farmers’ fears that they would lose access to the labour of British backpackers under Australia’s new trade agreement with the United Kingdom.
Meanwhile, the Department of Foreign Affairs and Trade issued a discussion paper exploring the potential improvement and expansion of the existing Seasonal Worker Program and the Pacific Labour Scheme, which target workers from ten Pacific countries.
These programs have become a key part of the government’s Pacific step-up policy, which aims to fend off China’s growing regional influence.
DFAT’s paper says the programs foster links between people, businesses and communities, “creating deeper connections between Australia and our Pacific family”.
The programs channel income into Pacific countries, without a large cost to Australia’s aid budget. They also provide some workers with training, which benefits their communities when they return home.
By filling labour shortages in rural Australia, they have the additional value of making the Pacific step-up policy more attractive to sceptical voters.
However, the suggestion by federal agriculture minister David Littleproud that the South-East Asia worker scheme will be less regulated than the Pacific Labour Scheme has raised concerns that South-East Asian workers could supplant Pacific workers in Australia.
The government will need to ensure this does not happen, or the broader strategic value of the Pacific schemes will be undermined.