US backs Australia over China

The US and Australia have agreed to stand ‘shoulder to shoulder’ in confronting an increasingly aggressive China as the two nations try to regulate digital trade.

US Trade Representative Katherine Tai. Picture: AFP

The US and Australia have agreed to stand “shoulder to shoulder” in confronting an increasingly aggressive China as the two nations seek to the standardise the rules that govern booming digital trade.

Trade Minister Dan Tehan met with Joe Biden’s top trade negotiator, Katherine Tai, on Wednesday in Washington DC to make it easier for the two nations’ small businesses to trade, in the final leg of a five-nation tour to shore up relations with Australia’s major trading partners in Asia.

“The US will stand shoulder to shoulder with us when it comes to their engagement in the Indo-Pacific and when it comes to dealing with economic coercion and other issues that are of mutual interest to both our nations,” Mr Tehan said.

Katherina Tai, Joe Biden’s Trade Representative, a cabinet-level position in the US government, said she was “closely monitoring the trade situation between Australia and China”.

“The United States stands with Australia to tackle this shared challenge and supports rules-based international trade to promote fair, market-orientated trade practices,” she said.

China, Australia’s biggest trade partner, has imposed a series of tariffs and quotas on range of Australian exports, including lobsters, beef, coal and barley, since the Morrison government last year called for an inquiry into the origins of Covid-19. These had caused less harm than might have been expected, Mr Tehan said.

“We think our agriculture sector has been injured and unfairly treated,” the minister said.

“When it comes to barley our exporters have found markets in the Middle East and Latin America; we’ve seen wine increase 33 per cent in the UK market,” Mr Tehan said.

Australia has taken legal action against China’s wine embargo in the World Trade Organisation, and Mr Tehan expects this to be resolved within “two to four years”. Mr Tehan said he had had no communication with Chinese officials since he sent a “very detailed” letter to China in January.

“I remain patient for that response,” he said.

Australia and the US, which is by far the biggest source of foreign investment in Australia, signed a free trade agreement in 2005 before digital commerce and the internet came to dominate business to business and business to consumer transactions.

“We want to put in place a regional digital trade agreement that will centre on making sure small business and people can benefit, by enabling them to have tools that they need not only to engage domestically but to engage in other markets.

“A small business that has good digital platforms in place is seven times more likely to export than one that doesn’t,” Mr Tehan said.

Mr Tehan said the investors and officials he’d met in Asia were interested in Australian hydrogen and ammonia.