Blow to farmers as China delays trade ‘upgrade’

Beijing has put a critical upgrade of its bilateral free-trade agreement with Australia on ice, crushing farmers’ hopes.

National Farmers Federation President Fiona Simson with primary producers, last week. Picture: AAP

Beijing has put a critical upgrade of its bilateral free-trade agreement with Australia on ice, crushing farmers’ hopes of a major expansion in market access after Chin­ese officials said they were “too busy” with other matters.

Despite the go-slow with Australia, China has granted upgrades to free-trade deals with Chile and Singapore, and is moving forward with upgrade negotiations with New Zealand.

China’s Ministry of Commerce cancelled a key meeting with Australian officials last year to finalise a review of the 2015 free-trade agreement, which would pave the way for an upgrade to the deal.

The move is the latest blow to the trade relationship amid delays facing Australian coal exports, the possible imposition of new duties on Australian barley and the stalling of a deal expanding access for Australian chilled beef exporters.

With the upgrade likely to offer the best benefits to the agriculture sector, the National Farmers Federation­ said it had hoped the upgrade would address its disappointment with the original deal.

“ChAFTA … like all FTAs was a compromise. Australian farmers naturally wanted better market access outcomes than achieved in the original FTA,” NFF president Fiona Simson told The Weekend Australian.

“Farmers’ comfort with the final package was, in part, due to China’s commitment to review market access outcomes with the expectation that this access would be expanded.”

Farmers hoped the upgrade could expand market access for Australian fruits or vegetables and further lower tariffs.

Department of Foreign Affairs and Trade official Todd Mercer told a parliamentary hearing the review process — the precursor to the upgrade — had started with a meeting in 2017. But Mr Mercer said DFAT had been unable to fix any further meetings and a scheduled meeting in 2018 did not go ahead.

“We have approached China on a number of occasions, both directly­ from Canberr­a and through our embassy in Beijing, registering … our interest in ­recommencing and progressing those reviews,’’ he said.

“The response from the Chin­ese side is that they are very busy.’’

Scott Morrison has said he would try not to publicly criticise the Chin­ese government, in order to have a better trading relationship. While that approach has allowed­ for more bilateral meetings to occur, experts said the stalled upgrade and various other trade glitches cast doubt over whether there had been any ­material improvement in the bilateral trade relationship so far.

Lowy Institute senior fellow Richard McGregor, former Australian trade diplomat Alan Oxley and research director at the Perth USAsia Centre Jeffrey Wilson all told The Weekend Australian the stalled review was in part due to ongoing diplomatic issues.

“The delay in setting a meeting could be a sign that even though Canberra and Beijing managed to reset relations late last year, they did so at a pretty lukewarm level,” Mr McGregor said.

Dr Wilson said the failure to progress with the review within the three-year period was a potential breach of the deal and “from an international law perspective (it’s) … a seriou­s matter. Not meeting someone for lunch is different to breaching a treaty commitment”.

DFAT said a factor could be that Chinese officials were distracted by US-China trade nego­tiations and US attempts to reform the World Trade Organisation.

“The division in the Ministry of Commerce which is responsible for our bilateral FTA — it’s the only FTA this division is respons­ible for — is their WTO division,’’ Mr Mercer said. “As you would understand, they have a lot on their plate at the moment.”

Mr McGregor agreed. “There may be good … reasons in China for any delay in upgrading the deal — notab­ly Beijing’s negotiations with the US, which could impinge on sectors like agricultural that also involve Australia,” he said.

Mr Oxley said China’s Agriculture Ministry was “very powerful” and may be resisting handing ­further concessions to Australia.