Collective consistency is the answer to Beijing’s trade coercion
16 Jun 2023|

Prime Minister Anthony Albanese’s empowerment of his foreign and defence ministers, and the balancing of constructive diplomacy with military deterrence policy, have helped the government deliver a highly effective first year in international security and foreign affairs.

Another critical element in the success has been the effort towards consistency, which is a vital aspect of the way any country projects itself into the world. Consistency means allies and partners can rely on us, while adversaries know they can’t bully us into rolling over.

And while Australia and other nations further work to stabilise relations with China, maintaining consistency on key issues of principle and national interest will only become more important as Beijing senses the West’s desire for re-engagement as an opportunity to test the limits of our patience and resolve.

The consistency of rhetoric to date has been commendable. For instance, Albanese said at the G7 summit in Japan last month that Beijing had to rescind all of its coercive trade measures against Australia—a clear signal that Beijing should not expect anything in return.

As he told reporters, it was ‘important that any of the impediments to trade between China and Australia be lifted’. This mirrored remarks he made a year earlier, also in Japan, just after becoming prime minister: ‘It is China that has placed sanctions on Australia. There is no justification for doing that. And that’s why they should be removed.’

The one divergence in the approach has been Australia’s suspension of its World Trade Organization case against Beijing over its anti-dumping and countervailing duty measures on barley. This was a clear concession to Beijing, compounded by the leaked reporting that the WTO had told the two countries Australia was poised to win the case.

In this case, Australia gave up a significant card without a proportionate return. Neither Australia nor any other country will be able to point to the ruling as a demonstration of where Beijing has breached trading rules, which could have set vital limits and markers on its future behaviour.

Pulling out of the case was a judgement by those who considered it more important to smooth the improvement of the relationship by allowing Beijing to avoid a public defeat and save face.

The balancing act of trying to counter Beijing’s aggression without disrupting domestic economies has produced plenty of inconsistency globally, from Southeast Asia to Europe.

Yet even former Philippines leader Rodrigo Duterte, who was as inconsistent as leaders come, allowed the 2016 South China Sea arbitration tribunal hearing to finish and ensure future Philippine governments and regional nations had a ruling to which they could point.

Just this week, US Defense Secretary Lloyd Austin noted its significance as ‘legally binding and … final’.

That ruling, a watershed moment that remains of benefit to the region and to future generations, followed Japan’s successful WTO case that held Beijing accountable in 2014 for economic coercion over rare earths.

Without those rulings, Beijing could further claim it had not fallen foul of global institutions and international rules.

Australia’s failure to proceed with its barley case in the WTO is the trade equivalent of allowing Beijing to avoid public reputational damage on the UN Convention of the Law of the Sea.

Indeed, the Chinese Communist Party has already made hay with Australia’s decision through its mouthpiece, the Global Times, which wrote recently that the coercive measures had been ‘in line with WTO rules’. The paper said Beijing’s removal of such measures would be an ‘act of goodwill’ that should yield ‘a positive response from the Australian side’.

So where does this leave Australia? It leaves us with an opportunity to declare that the concession on barley is all we’re prepared to give and send a clear signal that we will stand our ground on issues of national interest and principle.

The fact that there is continuing speculation in Australia about what Beijing might ask for in return for lifting its coercive trade measures—whether that is a loosening of our foreign investment regime or giving our support for negotiations for China to enter the Comprehensive and Progressive Trans-Pacific Partnership—shows we have a problem.

We cannot become complacent just because of the lifting of bans on timber or some other trade restriction in isolation. Trade is an inescapable component of national and international strategy.

There is positive momentum in a collective consistency that is emerging in response to coercion. It could be seen in the joint declaration issued last week by the Five Eyes partners and Japan condemning the use of economic coercion and committing to ‘address trade-related economic coercion and non-market policies and practices, including through multilateral institutions, such as the WTO’.

This followed the OECD ministerial statement that referenced the need for ‘deterring and countering economic coercion’ and praised Japan’s G7 focus on economic security. The opportune Quad meeting on the sidelines of the G7 should also have given Albanese the sense that there is genuine solidarity among countries that want to improve collective resilience against coercion.

Australia must continue to be a part of this new wave of open societies cooperating to both call out and deter the use of economic power for coercive purposes.

If a country and economy like Australia can remain steady in the face of Beijing’s attempts to weaponise trade, and can stand alongside partners who are doing the same, Beijing will have a shrinking strategic space in which to play its coercive trade games.