China-Australia relations: on first anniversary of trade conflict, hay-import licences bedevil Australian exporters

Relations between China and Australia have become fraught over the past year after Canberra pushed for an international probe into the origin of the coronavirus without diplomatic consultations beforehand, and Beijing eventually responded with a number of trade blocks on wine, barley, cotton, copper, coal, sugar and lobsters. We look at the issues in this series.

Two months after their expiration, Chinese import permits for hay from 25 Australian businesses have not been renewed, as the political and trade conflict between the two major trading partners crosses the one-year milestone.

China’s General Administration of Customs did not respond to requests for comment, and the Ministry of Commerce said it was not aware of the situation.

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Munro Patchett, general manager of Gilmac, Australia’s largest hay exporter, said the 25 facilities were in communication with Chinese customs and were waiting to learn the fate of their applications – made months before their expiration – to renew their import licences for five years.

“We are hoping it’s an oversight,” Patchett said.

The 25 facilities stopped exporting hay to China in February, concerned that shipments would be stopped at ports and not cleared for entry into the country. Exports from three other facilities that still have active hay imports permits have continued.

China buys about a third of the 1.2 million tonnes of hay that a total of 35 facilities across Australia process each year.

Detained shipments and stranded cargo at Chinese ports have become commonplace in trade between the two countries in the past year. Bilateral relations nosedived to record lows after Canberra pushed for an international probe into the origin of the coronavirus without diplomatic consultations with Beijing beforehand.

A year ago – reeling from the new pandemic at home, and following widespread global concerns that China had been slow to contain the pandemic after a mystery illness started spreading from a wet market in Wuhan in central China – Australian foreign minister Marise Payne appeared on local television calling for a global inquiry into the origin of the pandemic, saying the investigation should be run independently of the World Health Organization (WHO).

At the time, the WHO was also facing international criticism for its handling of the pandemic.

When asked if Australia’s relationship with China would change after the pandemic, and if trust in China had eroded, Payne said on April 19, 2020: “Relationships all around the world will change, and I do think that relationships between China and its partners ... will be changed in some ways.”

We would be very clear that we believe transparency is essential,” she added. “We have a relationship with China which is well-founded. It has, underpinning it, a comprehensive strategic partnership with five key pillars. But all of these things will need to be reviewed, will need to be considered, in light of changes in the world economy, in light of changes in international health security, and so many other things.”

That same week, other Australian politicians joined the chorus, including Prime Minister Scott Morrison, who also suggested that World Health Organization investigators in Wuhan be armed with the same powers as United Nations-backed weapons inspectors.

Following a “constructive discussion” with then US president Donald Trump, Morrison pushed for Australia to have a coordinating role in the independent pandemic inquiry, and he rallied support from other world leaders, though countries such as France and Britain said fighting the virus was paramount over apportioning blame.

Beijing bristled at the accusations, promptly responding that Canberra’s finger-pointing was baseless.

“Any doubt about China’s transparency is not only inconsistent with the facts, but also disrespectful of the tremendous efforts and sacrifices of the Chinese people,” Chinese foreign ministry spokesman Geng Shuang said that week. “The Chinese side has repeatedly stressed that the issue of the origin of the novel coronavirus is a serious question of science that should be studied by scientists and medical experts. We hope that the Australian side can treat this issue in an objective, scientific and scrupulous manner.”

And in a clear reference to the United States, Geng added: “We hope that Australia will do more things to deepen China-Australia relations, enhance mutual trust and help epidemic prevention and control in both countries, rather than dancing to the tune of a certain country to hype up the situation.”

That call for “mutual trust” became the mantra of the Chinese government when asked to respond to the subsequent series of trade blocks on Australian exports, including barley, beef, wine, lobsters and coal.

China eyes US coal to fill void created by Australia import ban

Australian barley and wine were both slapped with crippling anti-dumping duties last year, forming two of the four anti-dumping cases that China has initiated against Australia since joining the World Trade Organization in 2001. Australia has initiated 87 cases against Chinese exports.

China unofficially stopped exports of barley and wine, cotton, copper, coal, sugar and lobsters.

It also banned log timber from Australia due to pest problems.

When coal was “banned” in October, about 50 to 60 vessels bearing Australian coal remained stranded off the coast of China, prohibited from docking and unloading. Some have since docked to release crew, but the cargo remained on board.

Exporters of wine, lobsters and some fruits have found many of their shipments detained at Chinese ports and entry points for various failures to comply with customs rules, such as proper labelling, though breaches were common before the conflict.

Despite the frosty relations, trade between the two countries remained strong for goods not banned.

Australia’s iron ore exports to China, in particular, remained untouched as China ramped up its industrial activity as part of its post-coronavirus economic recovery. Iron ore is the key raw material in the production of steel, which is in high demand to fuel the government-supported construction and infrastructure building boom that helped the Chinese economy recover quickly from the damage caused by the pandemic.

Australia’s exports to China reached A$145.2 billion (US$112.4 billion) in 2020, just 2.16 per cent less than 2019’s A$148.4 billion total, which was the highest recorded in Australian statistical data going back to 1988.

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