Interview on 5CS, Classic Hits Breakfast, with Jordan Curtis

  • Transcript, E&OE
Topics: China-Australia trade relations
20 August 2020

Jordan Curtis: It's starting to look like China has it out for Australian BWS – that's barley, wine and steak. Firstly they put tariffs on barley, then limits on Australian beef exports as well, and now they're coming after the wine. I'm joined by Senator Simon Birmingham, Minister for Trade. How are you this morning, Senator?

Simon Birmingham: Hello Jordan. Great to speak with you.

Jordan Curtis: So, what is going on? How come China has turned their focus on Australian wine?

Simon Birmingham: Well China have indicated that they are launching what was known as an anti-dumping investigation into wine imports into China. This is a mechanism that any country can pursue - it's an allegation that products are being sold below market value, below cost price, or being subsidised in the Chinese market. Now, we're confident that Australian wine isn't doing those things and that our industry is nothing but a world-class, highly competitive producer of quality premium wines. And so, we'll have to go through the process with the Chinese system to try to prove that and provide them with the facts and the evidence to back us up.

Jordan Curtis: Of course Australian barley also suffered at the hands of claims of dumping as well, which has seen tariffs since put on Australian barley. Is there that risk that that could happen to Australian wines as well?

Simon Birmingham: There is that ultimate risk. This is a 12 to 18 month process likely to apply in relation to wine, but the barley industry did go through a similar process, and sadly there was an outcome that saw tariffs applied which is particularly devastating for those sending malting barley to China. So we have real concerns about the way that case was heard and handled, we are supporting the Australian barley industry to appeal it through some domestic processes in China now. We will pursue a World Trade Organization appeal if our current actions unsuccessful because, as with wine, we are confident that our grains industry is a competitive one, operates without trade distorting subsidies. Indeed, all of the evidence shows that Australia is one of the least subsidising nations in the world when it comes to our agricultural industries. And so, we're concerned that we're seeing the wine industry now being subjected to a similar process, but the best thing we can do for the wine industry is to simply support them to mount the strongest possible cases in their defence.

Jordan Curtis: How big an industry is wine exports to China from Australia?

Simon Birmingham: It's big bucks. We exported in 2019-'20 more than $1 billion worth of wine to China, so it's a huge export market from Australia. South Australia sent significant sums as well around, and accounted for the bulk of that $1 billion as we do for the bulk of Australia's wine exports out of SA - so it was more than $800 million of wine exports from SA to China. So big impacts there, but we are supporting the industry as well to try to grow market elsewhere around the world. And although from much smaller bases we are seeing strong growth in a whole range of different markets - we saw 50 per cent growth in Denmark last financial year, we saw more than 90 per cent growth in Indonesia, we saw growth in Sweden, in small markets like Latvia, even growth in France, and encouragingly continued growth in the United Kingdom which is a big market worth more than $400 million last financial year, and we did see continued growth there too.

Jordan Curtis: Having spoken to Grains Producers Australia about this as well, they've- looking at markets outside of China to start selling to. Is that going to be, I guess, the future of Australian exports - just making up that difference with other markets?

Simon Birmingham: Well, from a government perspective what we try to do is create the maximum amount of choice for our exporters, and that's why we've done trade deals over recent years, not only with China but with Japan, with the Republic of Korea. Through the Trans-Pacific Partnership we've opened up new opportunities in Canada, in Mexico, expanded opportunities in Vietnam, done a new trade agreement with Indonesia, pursuing deals with the European Union, the United Kingdom as well as new strategies to grow markets in India. So we're, from a government perspective, trying to give producers, farmers, exporters maximum choice about the markets they can do business in. Ultimately then it's a commercial decision for businesses as to who they trade with, who they sell their goods to and do business with, but we think there is- it's common sense for businesses to weigh the risks of different markets, and particularly when they see disruptions and threats like this anti-dumping investigation come along - that does change and impact the risk profile for certain countries.

Jordan Curtis: Of course, the elephant in the room being that this may not just be about dumping. It could be about something a bit more of a geopolitical scale. Is that something the Government is concerned about?

Simon Birmingham: I can well understand why people worry that could be the case, particularly given the intemperate and inappropriate remarks of China's Ambassador to Australia earlier this year who did seem to make a number of threats about different parts of the Australian industry and how they could be impacted by decisions within China. We- It's not going to be helpful though for me to join in, ascribing motivations in terms of what might be driving China to do these things. We will continue to do two things: one is we'll treat the cases themselves at face value; respond respectfully, fully, thoroughly with evidence and analysis to defend what to what we're doing and what our industry is doing; and, we'll also continue to stress that we do value the China relationship - we have our points of difference, but we also have significant points of complementarity. Trade between our countries has been good for both countries, it's fueled growth in both our countries; and that, as a government, we remain very willing to talk to our Chinese counterparts, to work through those points of difference, but to pursue and promote the positive aspects of the relationship wherever we can.

Jordan Curtis: No worries. Well Senator, thank you so much for joining me this morning.

Simon Birmingham: Jordan, my pleasure as always.

Jordan Curtis: Senator Simon Birmingham, Minister for Trade, on your Classic Hits Breakfast.

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