Murray Watt warns against reliance on China for agricultural exports

The frosty trade war with China is showing signs of thawing but Agriculture Minister Murray Watt says Australia should never again become so reliant on one trading partner.

Agriculture Minister Murray Watt has warned against a reliance on China for Australia’s agricultural exports. Picture: Glenn Campbell

The trade war with China is showing signs of thawing but Agriculture Minister Murray Watt says Australia should never again become so reliant on one trading partner.

In an interview for The Australian’s Global Food Forum, Senator Watt said the federal government and local producers were glad to see a thawing of tensions with the country’s largest trading partner but the lesson to be learned from the past three years was that Australian commodities should be sold to diversified markets.

“I think any producer would tell you they want to have China as an option, just given the size of the population, the growing wealth in those communities and the real interest in our premium products,” Senator Watt said.

“But I think one of the good things that has come from this is that our producers, and I think all Australians, have learned we do need to have much more diversified markets. We probably did have a few too many eggs in the China basket, across a range of commodities.”

In 2020, amid pressure from the Australian government for an investigation into the origins of Covid, China blocked or restricted imports of Australian lobster, beef, cotton, timber, coal and copper. Australian wine imports to China were hit with 212 per cent tariffs, along with 80 per cent tariffs for barley.

 

It left Australian industries reeling, particularly in the wine, barley and lobster sectors, which were heavily reliant on the Chinese market.

“That’s understandable because for a range of products, they are prepared to pay very good premiums,” Senator Watt said.

“But I guess the issues with China have forced the Australian government and producers to look elsewhere as well.”

China previously purchased about 70 per cent of Australia’s cotton, but since Beijing’s ban, Indonesia, Turkey and Vietnam have emerged as major markets.

“Products like barley had to open up new markets in the ­Middle East and some of the Central American countries,” Senator Watt said. “The reality is, you always want China to be there as one of your options but making sure in the future, we have a much more diverse approach, I think, is the way forward.”

The coal ban has been lifted and last week the Chinese government announced timber logs from Australia would again be accepted in Chinese ports.

Australia has agreed to pause its barley tariff dispute with the World Trade Organisation for three months while the two countries try to find a way forward.

Senator Watt also revealed a proposed container levy applied to all goods shipped into Australia could be introduced in the next federal budget.

The government is concerned that a poorly designed levy could be challenged by another country as an import barrier. “That work has started and I’d be certainly hopeful over the next few months we might be able to finalise it,” Senator Watt said.

“The advice to me is that there are some trade law issues that need to be resolved.

“I’d certainly be hopeful that we can resolve them because I think it is fair importers pay their fair share as the big risk creators.”

Senator Watt also acknowledged the government’s policy to enable water buybacks from farmers to meet water savings targets under the Murray-Darling Basin Plan could have consequences for regional economies.