Australia calls for clarity from China over embargo reports

In 2018/19, China was the destination for about 94 per cent of Australia rock lobster exports.
In 2018/19, China was the destination for about 94 per cent of Australia rock lobster exports.PHOTO: PIXABAY

SYDNEY/BEIJING • Australia's Trade Minister yesterday called for greater clarity from China over reports that an embargo could hit a slew of industries by the end of the week and further escalate tensions between the two countries.

Mr Simon Birmingham said he had raised concerns with Chinese officials over several trade issues including increased testing of live rock lobsters that "came out of the blue".

"There are lots of different rumours and stories at present and it is hard to quite define and discern which things are true, which things are inflated," he told Sydney radio station 2GB.

Although China's Ministry of Commerce had publicly denied the reports of a trade ban, more certainty was needed for Australian exporters, he added.

Australian winemakers that have enjoyed a booming demand from China's growing middle-class were also bracing themselves for possible tariffs. That would add to tensions that have already impacted beef, barley and coal exports.

China, Australia's biggest trade partner, has threatened economic blowback on a range of Australian goods since Canberra called for an inquiry into the Covid-19 pandemic.

Beijing has already launched a litany of measures this year, including probes into the alleged dumping of Australian wines, suspending beef imports, and issuing warnings to its citizens against travelling to Australia.

Treasury Wine Estates said that the China Alcoholic Drinks Association had called on the Chinese government to impose retrospective tariffs on some Australian wine.

"The request is associated with the ongoing anti-dumping investigation," the winemaker said.

Treasury Wine Estates said it was unclear whether the request would be accepted by the Chinese government or if tariffs would be applied retrospectively.

The winemaker also said it was aware of the "reports and speculation" around a larger embargo but had not yet received any notification from the Chinese authorities.

The Australian Financial Review, citing unnamed sources, said on Monday that Chinese officials met food and wine importers last week and warned them not to make new orders for Australian wine and farm products.

What started as a political spat between Beijing and Canberra has become a one-sided trade war that threatens serious disruption for a growing number of Australian exporters.

The curbs are a major escalation in Beijing's pressure campaign following a two-year stand-off over issues ranging from technology to the origins of the coronavirus.

China's blacklist - delivered verbally to commodities traders - also includes sugar and timber. It does not cover materials such as iron ore and natural gas, where import curbs could unduly damage China's own economy.

"The Chinese warned earlier this year that many of the goods that Australia exports were replaceable," said senior fellow Richard McGregor of Sydney-based think-tank Lowy Institute. "Now they're going about replacing them. China seems determined to punish Australia and make it an example to other countries."

Coal used to generate energy or make steel is the chunkiest of China's targets. It accounted for about 9 per cent of all Australia's earnings from exports to China last year, far behind the biggest contributor iron ore and a few notches below natural gas.

Iron ore is seen as more immune from trade actions because China's sprawling steel sector needs vast quantities of Australia's high-quality ore.

The remaining products now in China's crosshairs all fall in the "other" category. Together, they might account for about 5 per cent of export revenues if wheat is included, based on Bloomberg's analysis of Australian government data.

Beijing does not seem concerned about its richer population's demand for Australian lobster or fine wines. For premium wines, China is Australia's biggest buyer, spending almost A$1.2 billion (S$1.2 billion) in the year through September. That is about 2.5 times bigger than its exports to the United States.

China said on Tuesday that reduced imports of Australian products were the result of buyers' own decisions. Asked whether the government had instructed importers to stop buying Australian products, China's Foreign Ministry told Reuters: "Relevant companies reducing imports of relevant products from Australia are acting on their own initiative."

AGENCE FRANCE-PRESSE, BLOOMBERG, REUTERS

A version of this article appeared in the print edition of The Straits Times on November 05, 2020, with the headline 'Australia calls for clarity from China over embargo reports'. Subscribe