China’s imposition of a tariff on Australian barley exports rocked the agricultural industry, and fuelled conspiracy that the economic tariff was imposed as retaliation for Australia’s demand for an inquiry into the origins and handling of the coronavirus. In times such as these it is reassuring to have superpower allies such as the United States—but as our ‘special relationship’ remains in the virus’ grasp, who can Australia turn to for international support?
Around two-thirds of Australia’s total agricultural production is exported, injecting revenue back into Australia’s economy and granting Australia a relatively wide space in the international market for such a small country. With a third of those exports going directly to China, the deep economic links between the largest economy in the world and its oceanic neighbour have created prosperity and success, even during the crippling Global Financial Crisis. The implementation of an 80% tariff on Australian barley exported to China has shocked the Australian government, and has worried beef, dairy and wool farmers for fear their livelihoods will be targeted next. Mr Hosking, a Victorian barley farmer, has said that normally 4.5 million tonnes of barley is shipped to China from Australia, however under the current regime its very unlikely any of the harvest will reach China’s shores. With the barley industry already crippled by drought, the tariff imposed by Beijing provides a devastating blow to Australian farmers.
Rubbing salt in the wound, China has already found a new market for barley: the US. The Trump administration’s new trade deal with China mandates US$200 billion in American imports from China; including US$32 billion in agriculture. Eagle-eyed pundits are pointing out frustration within the Australian government at the Trump administration’s brash approach to international trade, which appears to be without regard for global allies. The US-Australia alliance has long been a steadfast guarantee within the Indo-Pacific region; however Dr Michael Fullilove of the Lowy Institute has pointed out that a healthy level of concern is warranted. Speaking to the Guardian, he states that crises such as COVID-19 are “stress tests” for nations, and that the US is failing miserably. Fullilove argues that Australia is looking to be engaged with a US which is internationally engaged and reliable—not one “buffeted by the ego of one individual”. The rising death toll due to the coronavirus and the inconsistency of information from the White House has revealed the ineffectual governance of the Trump administration. Couple this with the risk to Australia’s agricultural industry, as collateral damage for US-China trade, and Australia risks being trampled by China with little regard from our greatest global ally.
A senior Australian government official speaking anonymously to the Australia Financial Review has said that a more effectual route would have been for the US to enlist smaller nations throughout the Indo-Pacific and Europe to apply pressure to China to comply with World Trade Organisation doctrine. Former Prime Minister Kevin Rudd criticised the Morrison government, pointing out that the Coalition might have protected Australian farmers by not taking the lead on an inquiry against China, especially while Beijing was already under pressure to honour the US trade deal. The Morrison government has vehemently denied that the tariff is a result of the inquiry, almost naively supposing that Australia is somehow protected from China’s use of economic coercion—a tactic used by Beijing against nations such as South Korea, Taiwan, and Japan.
What then are the lucky country’s options to protect its agricultural industry amidst the growing threat of facing China’s economic coercion alone? Unfortunately, an over-reliance on China has placed Australia in the difficult position of being able to only slowly (if at all) untangle itself from Chinese resources. As previously mentioned, Australia sells a massive one-third of all total exports to China (totalling $123.3 billion). Australia’s next four greatest export buyers (South Korea, Japan, India and the US) make up just under a third of total export sales. China also dominates the Australian tourism industry, making up 26.5% of total tourism spending within Australia.
With these facts in mind, it is of far greater benefit to Australia’s economy for the government to keep its head down with regards to the World Health Organisation inquiry into the origins and handling of the coronavirus. Of course, this move would effectively back Australia into a corner and strip the nation of its reputation as a promoter of security, stability and respect for all states within the Indo-Pacific region. One thing remains clear: short term focus must remain on containing the spread of COVID-19 and ensuring international cooperation. Effective multilateral policy decisions within the Indo-Pacific region will lay the foundation for our continuing fight against the virus.