Australia will appeal to the World Trade Organisation for help in the deteriorating fight with China, but the Finance Minister warns the process could take years as the global body is in a “state of dysfunction”.
China’s ever-evolving range of trade restrictions on Australia’s exports grew to include coal on Tuesday, prompting a fierce response from the federal government.
Just a day later, Trade and Finance Minister Simon Birmingham said Australia would officially lodge a request with the WTO for a ruling on the spiralling situation.
Senator Birmingham said the government would ask the WTO to intervene in a dispute over Australian barley, one of the products worst-hit by China’s trade barriers. Similar fights on wine and coal exports could end up in the same forum.
“This is the logical and appropriate next step for Australia to take,” the Trade Minister said on Wednesday.
“It is appropriate that, when we argue for there to be international rules and an independent international umpire to resolve disputes, when we find ourselves in the case of having such disputes we call in the umpire.”
Senator Birmingham said the government felt “highly confident” there was “an incredibly strong case” to fight allegations that Australia had dumped barley in the Chinese market.
Beijing’s placed an 80.5 per cent tariff on Australian barley, over claims of breaching anti-dumping laws. China has slapped trade bans and tariffs on Australian goods as diplomatic tensions simmer over foreign interference and investment laws and calls for an independent inquiry into the origins of coronavirus.
Senator Birmingham said the decisions appeared to be sanctions against Australia. The government claims China is unfairly “singling out” Australia for punishment.
But despite Australian producers of beef, barley, timber, coal, seafood and more being caught up in the trade tensions and already hurting, the minister admitted it could take years – or even longer – before the WTO issues a ruling.
The WTO process is bogged down in massive delays due to US President Donald Trump blocking new appointees to its appeals court. The WTO also has the power only to allow aggrieved nations to install retaliatory tariffs of their own, a process TND understands the federal government does not want to pursue against China.
Senator Birmingham admitted the WTO process was “not perfect” and took “longer than would be ideal”.
“There is … an appellate body of the WTO, which is currently in a state of dysfunction,” he said.
However, he said China, Australia and about 20 other countries had agreed on an “alternative approach” while the WTO’s appellant court was not operating. He hoped this would help speed up the process.
Indeed, Senator Birmingham again publicly reached out to Chinese authorities, asking them to re-engage in stalled diplomatic talks and expressing Australia’s desire to resolve the trade fiascos outside the WTO.
“We again instead extend the important offer of dialogue and discussion as an off-road, and offramp to this dispute,” he said.
Senator Birmingham admitted the WTO appeal might not directly help Australian producers and exporters caught up in current tensions, but hoped it might stop further problems from developing.
“We also hope it provides a systematic check in relation to the way in which this decision and case is handled by China and provide greater certainty in the long run for other sectors and ultimately perhaps other countries in relation to how such issues are considered and handled,” he told TND.
Still no official word on coal ban
There has been no formal notification of the coal ban, with the issue reported only in Chinese state media.
However, a spokesman for the Chinese foreign ministry did not deny its existence. He said everything China did was legal, responsible and in the best interests of its consumers and companies.
Prime Minister Scott Morrison has claimed the coal ban would be a lose-lose for both countries and a clear breach of WTO rules, as well as a China-Australia free trade agreement.
“That is very serious for Australia but it is actually bigger than that,” he told the Seven Network on Wednesday.
Mr Morrison emphasised it would force China to buy dirtier coal from other countries, putting its climate change ambitions at risk.
He stressed that Japan and India took more Australian coal than China, with other key markets including South Korea also available to exporters.
The PM again called for leader-to-leader and ministerial-level dialogue with China to resolve the trade and diplomatic disputes.
Resources Minister Keith Pitt said Australia expected all its trading partners to play by the rules.
“We expect all of our exporters to have a level playing field, be treated fairly and that is what we are looking for,” he told the ABC.