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Fears of a third strike: China trade move risks thousands of jobs
By Mike Foley and Eryk Bagshaw
The dairy industry has called a snap meeting with the federal government as fears grow of a third trade strike from Beijing in retaliation for Australia's pursuit of a global inquiry into the coronavirus.
China on Tuesday launched its second trade investigation in as many days, hitting four of Australia's largest abattoirs for technical infringements and putting $200 million a month in trade and thousands of jobs under threat.
The move followed an anti-dumping investigation on Monday which could see $600 million worth of Australian barley hit with tariffs of up to 80 per cent.
China has suspended imports from four Australian beef processors. Credit: Alex Ellinghausen.
Trade Minister Simon Birmingham has asked for a phone call from his Chinese counterpart, Zhong Shan, to resolve the situation as relations between the two countries sour. Australia will push for a global independent probe into the origins of COVID-19 at the World Health Assembly this week.
Senator Birmingham and Mr Zhong spoke in Shanghai in November, but strained diplomatic tensions have escalated further since then. China's ambassador, Cheng Jingye, has warned that Chinese consumers could choose to boycott Australian products such as beef and wine out of a patriotic sense of duty.
The government is concerned that a third trade hit from Beijing would be seen as an unmistakable message that China intends to use economic levers to pressure Australia to back down from its coronavirus inquiry.
China’s Ministry of Commerce put tariffs on alloy steel tubes imported from the United States and the European Union on Friday. Australia is the only nation to have two trade threats put on it since the beginning of the pandemic.
China’s Ministry of Foreign Affairs spokesman, Zhao Lijian, said on Tuesday night that the restrictions on Australian beef exporters were due to violations of quarantine and custom standards. Mr Zhao criticised Australia’s pursuit of the coronavirus inquiry for "political reasons".
"Mutual respect should be the basis of good relations," he said
Dairy industry representatives called an urgent meeting with Agriculture Minister David Littleproud on Tuesday afternoon.
Dairy Connect chief executive Shaughn Morgan said "any threat to export markets is of deep concern to an agricultural industry".
"We call on the federal government to do all in its power to ensure that doesn’t happen," Mr Morgan said.
There are also concerns within government and industry that wine exporters could be vulnerable to a dispute. Australia's largest export, resources such as iron ore and coal, are seen as more secure as they help power the Chinese economy, while education services are harder to target at short notice.
Wine shipments were held up at Chinese customs ports after Australia introduced foreign interference laws and banned Chinese telecommunications firm Huawei from the 5G network in 2018.
Chief executive of peak body Australian Grape and Wine, Tony Battaglene, said he had made its fears over general export disruptions "clear to the government for some time".
"We are absolutely worried, and would like to see a quick resolution to these issues," Mr Battaglene said.
Senator Birmingham and Mr Littleproud said the government was notified late on Monday that four Australian meat establishments – two Queensland abattoirs owned by Australia's largest meat processor, JBS, as well as Kilcoy Pastoral Company near Brisbane and Northern Co-operative Meat Company at Casino, NSW – had been suspended over labelling and health certificate requirements.
Andrew "Twiggy" Forrest’s Harvey Beef, the largest beef producer and exporter in WA, has not been impacted.
"Thousands of jobs relate to these meat processing facilities," Senator Birmingham said. "Many more farmers rely upon them in terms of selling cattle into those facilities and it is a very important market for Australia."
Former foreign minister Julie Bishop said if the trade dispute was related to Australia’s calls for an inquiry and China was trying to "punish Australia with economic retaliation" then the government needed to decouple those issues. "If China does impose tariffs, then we should take it to the [World Trade Organisation]," she said.
Australian Meat Industry Council chief executive Patrick Hutchinson said his representative group was working with the Department of Foreign Affairs and Trade.
"This is a technical issue and we've had technical issues before," Mr Hutchinson said. "It's important to remember these companies have just been suspended and at any stage the suspension can be lifted."
The government expects the technical disputes to be resolved within a month and is racing to get its response to China as soon as possible. Any delay from China in resolving the issues would be seen as a sign of wider economic retaliation.
Senator Birmingham said Australia would act in its national interest in pursuing the coronavirus inquiry and was treating the separate trade issues on their merits. He said he expected other governments to do the same.
"I think right around the world, people would expect that when hundreds of thousands of people have died, millions of people have lost their jobs, and billions of people have had their lives disrupted, of course, there should be a thorough investigation and inquiry into it," he said.
"But it's in no way related to the export arrangements for Australian beef or for Australian barley or for anything else."
China is Australia's largest destination for dairy exports, making up 33 per cent of the industry's trade. More than half of Australia's wine exports earnings come from China. Both markets are each worth more than $1 billion.
With James Massola