Restrictions are lessening more than three years after China first stopped a number of Australian imports due to a political disagreement, but restarting commerce is proving more difficult than blocking it in the first place.
China’s coal restrictions were loosened in January after thawing ties were sparked by a leaders’ summit late last year. However, March’s imports of coal—three months later—were still just a third of the three-year average.
According to merchants, bureaucratic slowness made it take weeks for information to reach Chinese customs officers. They also had to visit eight government agencies in order to sort licenses. Australia was still not included in the import licensing computer system in February, according to purchasers.
The economy has also become worse. Australian miners no longer give discounted pricing on coking coal since they have now discovered new clients. In the meanwhile, China’s market has been seized by less expensive imports from Russia and Mongolia.
David Olsson, head of the Australia China Business Council, said that “these things take time, there is no magic wand to bring everything back to normal, it will be a slow process over several months.”
Australia and China’s relationship initially deteriorated in 2017 when Canberra expressed alarm about Beijing’s militarization of disputed islands in the South China Sea and passed anti-foreign influence legislation that was seen as directed at Beijing.
Following Australia’s request for an investigation into the causes of COVID-19, China reacted in 2020 by imposing trade restrictions that reduced Australian imports of everything from coal to lumber by almost A$17 billion.
The slow restart of the coal trade implies that it may take months or perhaps years to revive the markets, logistics, and expectations that lubricated the trade in limited goods.
Overall, however, Australian exports to China have increased despite the restrictions, going from A$149 billion in 2019 to A$175 billion in 2018. This growth is mostly attributable to a burgeoning iron ore trade that China’s steel factories cannot afford to risk upsetting.
The removal of coal prohibitions was an early victory for the center-left Labor administration, which has prioritized the restoration of open commerce. The commerce minister is anticipated to undertake a similar trip to Beijing in the coming weeks. The foreign minister Penny Wong visited Beijing in December.
The nations agreed last month to settle a World Trade Organization dispute over duties on Chinese barley within three months. The trade minister for Australia is optimistic that wine duties will follow.
One problem is that there may not be enough Australian customs agents to certify goods for export. According to Frank Rudkiewicz, a “authorised officer” (AO) licensed by the Agriculture Department to examine export cargoes, many people disappeared as the newly forbidden wood log trade vanished over night.
“There was so much work guaranteed, and then overnight it all fell through,” he claimed.
Because no one else was available, he was recently flown from South Australia, almost 1,800 kilometers north, to Townsville to verify a shipment of wheat.
Three customs agents from three different states talked with Reuters. All brought up shortages. One in Tasmania attributed “across-the-board” issues to delays in government clearances, which went from taking six months to up to 15 months.
In a statement, the Department of Agriculture said that it was not aware of any notable adjustments to the number of AOs. The government noted that the typical wait time from application to appointment is at least three months and has not changed since 2011.
A speedy return to pre-restriction trade levels is doubtful, according to officials and exporters, due to competitiveness, a desire to keep new markets, and skepticism about the sustainability of the diplomatic thaw.
According to a coal dealer located in China, “Chinese coal traders see little incentive now to sign long-term contracts,” noting excessive inventories and “the potential risk of the relationship turning sour again.”
Several Australian wine, lumber, and meat companies told Reuters they would not prioritize China at the cost of more recent customers.
The chairman of Cattle Australia, David Foote, stated that it would be shortsighted to lose the new enterprises that we have worked so hard to establish.
Producers who retrace their steps to China will encounter rivals who have had more than two years to advance.
The president of Australian Grape & Wine, Lee Mclean, predicted that due to firmly established French and Chilean competition, Australian wine exports are unlikely to return to pre-dispute levels very soon.
Furthermore, Australia has made it plain that unfettered trade is not a sign to return to China at the cost of other markets even as it works towards economic reconciliation.
And the two nations’ tensions are still present. On the basis of national security, Australia prohibited a Chinese investment in rare earths in February.
Even as she announced the agreement about the barley tariffs, Foreign Minister Wong encouraged exporters to diversify.
Don Farrell, the trade minister, said on Monday that “we never want to find ourselves in a situation where we’re so totally reliant on one market.”
Slow resumption of the coal trade between China and Australia
After Chinese trade tariffs, barley exporters change their strategyhttps://tmsnrt.rs/3AGNcX5
(Lewis Jackson and Muyu Xu contributed to the reporting; Praveen Menon and Shri Navaratnam edited it)