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2 June 2021

With Greg Earl

Morrison and Ardern

Scott Morrison and Jacinda Ardern have insisted that Australia and New Zealand are taking a unified approach to dealing with China, including on human rights and economic-coercion issues.

The leaders were in Queenstown on Monday for their first in-person meeting since the beginning of the pandemic.

Their expression of solidarity on China follows more divergent comments from New Zealand’s trade and foreign ministers, who suggested they had avoided tension with China by being less publicly critical of Beijing.

But the Ardern government paved the way for a harmonious leaders’ meeting by announcing New Zealand would support Australia in its World Trade Organization appeal against China’s tariffs on Australian barley exports.

Ardern said the New Zealand–Australia relationship was the “most important for New Zealand”, while Morrison said the countries were “great partners, friends, allies and indeed family”.

The joint statement issued by the leaders provides a more detailed account of trans-Tasman cooperation on regional issues than is normally made after these meetings, as if to underline the importance of the partnership.

A public divide between the long-time allies, and arguably the closest countries in the Asia region, would only make both of them more vulnerable to pressure from Beijing.

Still, the Morrison government should not ignore the reality that New Zealand’s less strident tone in its dealings with China has a lot in common with how most other Asian countries relate to the region’s rising superpower.

Biden’s historic tax deal

Joe Biden is close to achieving his first major international economic agreement later this week, with the Group of Seven finance ministers reportedly set to agree on global corporate tax reform.

When the new US administration announced earlier this year that it would introduce higher domestic taxes to fund the pandemic recovery, it lent fresh momentum to the long-running quest for a crackdown on multinationals taking advantage of low-tax regimes.

Then a week ago, the United States backed a global minimum tax rate of 15 per cent on multinationals. The United States had previously called for a 21 per cent tax, but it proposed the lower rate to speed up negotiations on a formal agreement at the G7 leader’s summit on 11 June. The summit will be Biden’s first in-person global gathering since assuming office.

A deal among the top industrial economies would limit the ability of multinationals to shift their profits to low-tax jurisdictions and could be the largest shake-up to international company tax in a century.

By agreeing that tech giants, most of them American, should pay more tax in the countries where they sell their products, the United States has ended its long stand-off with European countries on the issue.

With government budgets in rich countries under pressure from high spending on pandemic relief, the prospect of US$60 billion or more being redirected to them from tax havens makes the proposed tax reform particularly attractive.

A G7 agreement on global tax would be taken up by the Organisation for Economic Co-operation and Development, which has been working towards reaching an agreement of its own later this year.

That means former Australian finance minister Mathias Cormann, who started work as the OECD secretary-general this week, will be right in the middle of implementing a historic reform.

COVID’s origin

US intelligence agencies have started a new, more coordinated investigation into the origins of COVID-19.

News of the probe followed confirmation last week that the intelligence community is split over whether the initial outbreak resulted from a Chinese laboratory leak or was passed from an unknown animal to humans.

Joe Biden told intelligence agencies to “redouble” their efforts to identify the virus’s origins and said he wanted to see results in ninety days. He said the investigation would involve pressing China to “provide access to all relevant data and evidence”.

Experts tend to favour the theory that humans acquired COVID-19 from an animal, but the theory that the virus was leaked from the Wuhan Institute of Virology has been gaining support – particularly since the World Health Organization released an inconclusive report on its own investigations earlier this year.

While the Morrison government angered China by unilaterally supporting the WHO’s inquiry, it has been publicly circumspect about its views on the virus’s origins and has tended to align with the zoonotic theory.

As government and academic experts continue to examine emerging evidence from China and elsewhere, it seems the issue may not be resolved for a long time yet.

Reaching a consensus on the origins of COVID-19 is important, because it would probably help head off another pandemic.

In the meantime, speeding up the distribution of vaccines to developing countries is more pressing and is a task that would benefit from some degree of cooperation with China.


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