Aussie parliament look into Australia-China trade reliance

AUTRALIA's reliance - and potential over reliance - on China as a trade partner is being put under the microscope of a parliamentary inquiry

23 July 2020 - 19:06

AUTRALIA's reliance - and potential over reliance - on China as a trade partner is being put under the microscope of a parliamentary inquiry.

Although not explicitly stated, the inquiry centred around Australia's trade relationship with China and the terms of reference asked the committee to 'consider if Australia is too reliant on any one market for exports'.

With about 28 per cent of all Australian agricultural products going to China, several peak agricultural bodies either made a submission or appeared before the joint parliamentary committee, reports North Queensland Register, Townsville.

WoolProducers Australia chief executive Jo Hall said the wool industry was viewed by many as over-reliant on China, given around 80 per cent of the nation's greasy wool was exported there.

'But this certainly is not the case,' Ms Hall wrote in a submission. The wool industries relationship with China was 'symbiotic' because China needed Australian wool for its processing sector, as it was the highest quality wool produced in the world.

'Australia needs diversification of markets for Australian wool,' Ms Hall wrote.

'This does not mean that we need to withdraw from China altogether, but instead look to grow exports to existing markets such as Europe and India and develop new market opportunities for processing in countries such as Indonesia.'

GrainGrowers chief executive David McKeon said while it was great to talk about diversifying trade, the government had to recognise it took a lot of time, effort and resources to do so.

'At the moment we are talking about finding a new home for barley, now that China won't take the five million tonnes of it that we'll produce this year,' he said.

'But to actually extract a malt premium for barley takes years of resources and market work.

'A whole lot of pieces of the puzzles need to come together, to get a really close connection between the crop that's put in the ground and its international destination.'

Mr McKeon said that ranged from breeding the right varieties to understanding the quality requirements of trading partners.

'Those things influences agronomic decisions - for example, many international customers have different restrictions for chemical levels,' he said.

'We need a long-led time to understand how to extract the market premium and connect that to farm management decisions before we get to the supply chain of the grain.'

Mr McKeon said the grain industry was looking for the government to 'step up' and play a key role. 'They need to put more resources into this space to drive outcomes,' he said.

'Most non-tariff barriers can only be dealt with by direct government-to-government dialogue.'

Agribusiness Australia director Mark Barber said it was important to recognise the market forces behind the Chinese trade concentration.

'That's occurred because Australian agriculture exporters have made a number of decisions about the attractiveness of that market compared to others,' Mr Barber said.

'They're exporting to that country because it's the highest return. We recognise there is a concentration, but it's also up to companies to make their own choices.'

Given the current climate, Mr Barber said many exporters would be considering their own need for diversification.

'But there are costs associated with switching and that comes with its own level of risk,' he said.

'There are other markets around the world that we need to explore more - India has opportunities for growth and the Middle East is often overlooked.'

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