New world of trade deals to offset ‘unfair’ China, says Simon Birmingham

Australia will pursue trade agreements with Israel, Switzerland, Norway, Middle East and Latin American nations.

Outgoing Trade Minister Simon Birmingham says he expects free-trade deals with the EU and Britain to be ‘concluded within the next year’ Picture: Gary Ramage

Australia will pursue trade agreements with Israel, Switzerland, Norway, Middle East and Latin American nations next year to open up new markets amid China’s “unfair, unjust and unwarranted” targeting of exporters.

Outgoing Trade Minister Simon Birmingham, who will hand over the trade, tourism and investment portfolio to Dan Tehan, will on Monday unveil the Morrison government’s next steps in market diversification for farmers and businesses.

The Finance Minister, who last week confirmed the government would take action in the World Trade Organisation against China over tariffs targeting barley exporters, said rising global competition and COVID-19 trade impacts meant Australians cannot rest “on our laurels”.

“Some businesses are also now feeling or bracing for the impact of China’s punitive trade actions,” Senator Birmingham said.

“Having acted with nothing but honour in supplying high-quality, safe and reliable goods and services at competitive market terms to Chinese customers, the targeting of these Australian businesses is unfair, unjust and unwarranted.

“In the face of these difficulties it would be easy to be pessimistic or even resigned to defeat. But we should bring the opposite disposition. If there was to be just one piece of advice I would offer it would be to keep on reaching out to the world.”

Senator Birmingham, who took on the trade portfolio in August 2018, said the Department of Foreign Affairs and Trade would use $6.6m allocated in the October budget to initiate feasibility studies scoping the benefits of free-trade agreements with Israel and European Free Trade Association nations, including Switzerland, Norway and Iceland.

The government is already pursuing agreements with Britain and the EU.

Total merchandise trade with Israel hit $1.1bn in 2019, while trade between Australia and EFTA countries reached $9.4bn. Investment from Switzerland is valued at $56bn.

“With one in five jobs reliant on trade, and recent trade disruptions with China changing the risk profile for some Australian businesses, it’s crucial we continue to look to provide them with even more choices and markets to do business around the world,” he said.

“We’ve seen our trade engagement with Israel continue to increase across a range of sectors in recent years, including in advanced manufacturing and the defence industry.

“If ultimately realised, these agreements would secure Australia near universal coverage of trade agreements across the democratic, advanced market economies of the OECD.”

After replacing Mathias Cormann as Finance Minister and leader of the government in the Senate in October, Senator Birmingham leaves the trade role amid rising tensions with Beijing.

Writing in The Australian on Monday, Senator Birmingham urged “sceptics who say ‘isn’t it all just China’ or ‘isn’t it all just iron ore’ ” to talk to the “many Australian businesses growing trade in other goods or services with other markets”.

He said he expected free-trade agreements with the EU and Britain would be “concluded within the next year along with the Pacific Alliance agreement with Latin American nations”. He also signalled the importance of enhancing ties with India, an emerging boom market for Australia, and Middle Eastern nations through the Gulf Cooperation Council.

“Deals must be commercially meaningful and all of our partners should know that in negotiating agreements we will never sacrifice the prime ambitions of substantially eliminating trade-distorting tariffs, quotas and other non-tariff barriers.”

Senator Birmingham cited the success of Coalition government trade deals with China, South Korea, Peru, Indonesia, Hong Kong, Japan and Pacific nations, as well as the Trans-Pacific Partnership and Regional Comprehensive Economic Partnership Agreement. “These agreements have pushed the share of Australian trade enjoying preferential access into major markets up from around 27 per cent when we won government to around 70 per cent now.

“Like the World Trade Organisation, these agreements aren’t all perfect and can’t always guarantee the behaviour of other nations, but they do provide worthwhile competitive advantages and have delivered ongoing liberalisation that enhances economic and, ultimately, human outcomes.”

Senator Birmingham said Australia must “embrace change, not turn our backs on it”.

The South Australian senator said with the world and regional partners becoming more digitised, the government was prioritising the development of a Regional Digital Trade Strategy to ensure our businesses are in a position to connect and engage in “cross-border digital trade”.

“As COVID-19 has demonstrated and accelerated, the nature of trade is changing too.”