News Morrison: China coal ban could breach world trade rules, ‘bad outcome for both’

Morrison: China coal ban could breach world trade rules, ‘bad outcome for both’

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China has not officially informed the federal government of a reported multibillion-dollar ban on Australian coal, Scott Morrison says, but he says the move would “obviously” breach World Trade Organisation rules.

As the dispute escalated on Tuesday, Trade Minister Simon Birmingham slammed China for announcing major trade and diplomatic decisions via “anonymous drops to journalists from an embassy”, while the PM again refused to accept any missteps from his government in its relationship with the growing superpower.

Overnight, state media outlet The Global Times reported Chinese power plants had been directed to stop taking Australian coal.

Dozens of ships carrying Australian coal have been stranded off the coast of China for months, waiting to unload their cargo. They are stymied by a growing trade stoush between the two nations that has affected exports of beef, barley, wine, timber, wheat and more.

Chinese power plants have reportedly stopped taking Australian coal. Photo: AAP

Australia exported more than $13 billion of coal to China in 2019 – about $4 billion of that the thermal coal used in power plants.

Mr Morrison, speaking at a power plant in Tasmania, said Australia had received no official word from China on the reported coal ban, and moved to downplay the speculation.

“Until we are in a position to have that clarified, then we can only treat this as media speculation,” he said on Tuesday.

“If that were the case, then that would obviously be in breach of WTO (World Trade Organisation) rules, it would be obviously in breach of our free trade agreement, and so we would hope that is certainly not the case.”

The growing list of trade issues has been linked to China’s list of ‘grievances’ aired through Australian media. They include the federal government’s foreign investment rules, banning Huawei from the 5G network, and the push for an inquiry into the origins of COVID-19.

Mr Morrison said it was concerning that China appeared to be making “a conflation between political issues and a trading relationship”.

Despite the $4 billion price tag on coal exports for Chinese power plants being in jeopardy, the PM downplayed the reports, pointing out Australia’s biggest coal markets were Japan and India.

Scott Morrison says Australia has had no confirmation of the coal ban. Photo: AAP

“Our coal mines and our coal exports have a diverse customer base. But, obviously we take these issues very seriously,” he said.

He said the situation, if confirmed, would be a “lose-lose” for both countries, claiming Australian coal burned cleaner than that from other nations.

“That would be a bad outcome for the environment. It would be a bad outcome for the trading relationship between Australia and China, that both countries benefit from,” Mr Morrison said.

He said he wanted to have “mature discussions” about “a number of other trade issues that are currently on foot” with China. When asked if he felt Australia had fumbled in its relationship with China, the PM said “I don’t at all”.

Earlier, Senator Birmingham said he was “deeply troubled” by the reports, but also took aim at China for making the announcement through state media, not official diplomatic channels.

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Simon Birmingham called it “unacceptable”. Photo: AAP

“It is certainly unacceptable to see a circumstance where governments,
businesses find out about decisions of other businesses or other governments, purely via media outlets,” he said in Sydney.

“When the Australian government makes decisions that affect other governments, we work through the proper diplomatic channels to inform those governments and with do so in a manner that is respectful and appropriate … and we would urge others to apply the same courtesies.”

Senator Birmingham accused China of “discriminatory trade practices”, adding Australia was close to finalising a complaint to the WTO over Chinese tariffs imposed on barley.

He claimed Chinese officials “remain unwilling to come to the table, even as they change position and take these sorts of steps”.

Further escalations in the simmering trade war could cost Australia some 6 per cent of its gross domestic product, according to some projections.

Labor’s shadow resources minister, Ed Husic, said China’s actions were “wrong”, and urged the federal government to work harder to resolve the trade issues.

“This is not a trade issue. This is a diplomatic one, and our coalmining communities should not be hurt as a result of this. So we do need to get an answer on that,” he said at a press conference in Sydney.

“What’s the game plan from the government on this?”

Mr Husic continued a Labor talking point from recent weeks, saying the Morrison government should be helping exporters in affected industries find new markets for their products. He cited India, Bangladesh, and Vietnam as possible new markets for coal.

Mr Husic also took aim at suggestions from government senator and former resources minister, Matt Canavan, that Australia impose retaliatory tariffs on iron ore exports to China.

He called that idea “bone-headed”.