Australia rejects China offer after Trump escalation, reopens free trade talks with EU

Beijing’s bid to enlist Australia to join its side in the escalating trade war with the United States has drawn a frosty response, with the Albanese government vowing to redouble its push to seek new export markets beyond China and the US.

The European Union’s top trade official is set to travel to Australia soon after the federal election to restart negotiations on an elusive free trade pact, after Trade Minister Don Farrell spoke to his counterpart on Wednesday night in an unusual move during an election campaign.

Trade Minister Don Farrell is reopening talks about free trade with the European Union.Credit: Alex Ellinghausen

The focus on trade came as a visiting Pacific leader rejected China’s bid to force it to break with Taiwan, while arguing there was still lingering damage from a decade-old gaffe in which Peter Dutton joked about rising sea levels in the Pacific.

Defence Minister Richard Marles firmly rejected Chinese ambassador to Australia Xiao Qian’s offer to “join hands” with Australia to respond to Trump’s tariffs, which the diplomat made in an opinion piece in this masthead on Thursday.

“We’re not about to make common cause with China – that’s not what’s going to happen here,” Marles told Nine’s Today.

“I don’t think we’ll be holding China’s hand.”

Instead, he said, Australia was trying to diversify its trading partners, including by expanding trade ties with nations such as Indonesia and India.

Chinese President Xi Jinping has repeatedly called for Australia to loosen restrictions on Chinese foreign investment, including in his most recent meeting with Albanese last November where he requested a “fair, transparent and non-discriminatory business environment” for Chinese enterprises.

The push by both major parties to terminate Chinese firm Landbridge’s 99-year lease of the Port of Darwin on national security grounds had underlined ongoing tensions in the relationship, even after China ended all restrictions on Australian imports.

Asked whether he would “join hands” with China, Albanese said: “We will speak for ourselves … and Australia’s position is that free and fair trade is a good thing.”

On the question of boosting trade ties with China, Albanese said: “We’ll be trying to increase our trade with every country.”

Opposition Leader Peter Dutton said: “Australia should have a strong trading relationship with China, in our mutual interests. I want the factories to expand so we can export to the world.

“When the Coalition was in government, we signed 11 free trade agreements. Do you know how many this government signed? One free trade agreement. So I want our industry here to grow.”

EU Trade Commissioner Maros Sefcovic proposed moving towards reopening talks during his hour-long video meeting with Australian counterpart Don Farrell on Wednesday evening, two years after negotiations collapsed over disagreements about agricultural access to the EU’s 450 million customers.

Any potential Australia-EU deal would eliminate about 98 per cent of tariffs and reduce red tape for companies doing business across borders. Business groups estimate an agreement would deliver a $6 billion boost to what is already Australia’s third-largest trading partner after China and Japan.

European Commission trade spokesperson Olof Gill told this masthead the discussions were “positive and constructive” and came about at Australia’s request.

“They discussed a possible timeline and the broader context for revisiting EU-AU FTA negotiations and bringing them across the finish line,” Gill said.

“As the commissioner said earlier this week … we are committed to diversifying our trade through new FTAs.”

Farrell has emphasised that he wouldn’t sign a deal “just for the sake of it” and entered the meeting to assess if Europeans were ready for detailed negotiations after Australia’s May 3 election.

Less than 5 per cent of Australia’s goods exports go to the United States, compared to about 20 per cent for the EU.

Farrell told this masthead on Thursday the meeting was “warm and constructive” and had gone “much longer than it had intended to”.

“We have agreed to resume talks face to face as soon as we can after the election,” Farrell said.

“The world has changed in a very short period of time, and they seem very genuine to get back to discussions and reach an agreement.”

Meanwhile, Palau President Surangel Samuel Whipps Jr told a Lowy Institute event in Sydney that his nation would not join other Pacific nations by ditching diplomatic recognition of Taiwan in favour of China, saying: “When you’re married, you’re married until death do us part, and that’s the relationship that we see with Taiwan.”

He added: “We do know that China has one goal, and that is for us to renounce Taiwan, but we hope that they understand that is a sovereign decision, and no country tells us who we should be friends with, and our relationship with Taiwan is stronger than ever.”

Commenting on a 2015 incident in which a boom microphone caught Dutton joking about Pacific leaders running late because “time doesn’t mean anything when you’re about to have water lapping at your door”, Whipps Jr said Dutton had more work to do to rebuild trust with Pacific leaders on climate.

“Probably stop making mistakes,” he said. “When comments are made like that they are damaging to the relationship.”

Whipps Jr said he understood that politicians seek to “rile up” their supporters, but expressed alarm at Dutton recently describing Australia’s bid to host the COP31 climate conference as “madness”.

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