The way forward for Australia-China trade disputes

By Jamie Salter

China has increased tariffs on Australian beef from less than five per cent to 12 per cent for six months, and is expected to increase tariffs on whole milk powder later this year.

These changes come after China hiked tariffs on Australian barley by about 80 per cent for the next five years and banned beef imports from four abattoirs.

UNSW Law's China International Business and Economic Law Centre co-director Professor Heng Wang said Australia needed to strengthen its international trade relations to move forward from these tariffs.

He said the best method to do so was through the Regional Comprehensive Economic Partnership alongside the World Trade Organisation.

However, Mr Wang said dispute settlement through the WTO could take several years.

“(Australia and China) should seize the opportunity to sort out these issues through the RCEP which will give them a third adjudicator to address these disputes, because bi-lateral free trade agreements between the two nations are very difficult to cool down trade tensions,” Mr Wang said.

The RCEP is the only large Free Trade Agreement body through which China is negotiating with other countries in the region.

“And because that is a large FTA, then it is easier to diversify, or to lower the tensions, and to find an impartial solution among the RCEP’s more than 10 countries,” Mr Wang said.

He said another option was to explore a smaller group from the WTO, as not all 164 members would agree on new rules.

“It’s important to build confidence and predictability in trade relations, because rational choices in trade helps to make the economy more competitive, and you're then able to get cheaper and higher quality supplies, if everything goes smoothly,” Mr Wang said.

UNSW Associate Professor Fengshi Wu said China’s rise as a global power was not set in stone and Australia should explore options for trade elsewhere.

“Governments (including Australia) could play a role in making their own transnational business relations weaker in order to reduce economic interdependence,” she said.

“After a decade there could be an accumulative impact, then China may no longer be the number one trading partner for Australia.

“It’s possible to change that economic and trade dependence on China.”