Australian Prime Minister Scott Morrison has called upon the World Trade Organisation (WTO) to take action against China, which is engaged in serial economic skirmishes against Canberra.
Australia had in December last year escalated its trade dispute with China after the communist country levied an 80 per cent tariff on barley exports, alleging that Australia was dumping its produce.
The Australian Prime Minister now wants the WTO to resolve their dispute which is hurting the Australian farm sector.
Morrison is trying to seek the support of the G-7 group of countries against its trade war with China as the world's richest democracies meet in Cornwall in the UK. Australia wants reforms in the WTO so that the global trading system can be restored against China's "economic coercion".
Trade and diplomatic relations slid in 2020 after Canberra demanded a probe into the origins of the coronavirus. In retaliation, China imposed anti-dumping duties on Australian imports. Despite the massive losses staring it in the face, with China its biggest trade partner, Australia has not wavered from its call seeking investigation into the origins of the Covid-19 virus.
However, Australia, a mining giant, is not entirely toothless, in its bitter economic feud with China. Despite the sanctions levied on Australian exports, the country has managed to break into new markets in Asia and Latin America. In areas like iron ore, it has actually managed to sell at abnormally higher prices, forcing China to intensify its mineral hunt in Africa.
Nikkei Asia says that the massive Chinese demand for iron ore has kept prices high and Australia has only benefited from it. In fact, the high prices and a surge in imports by China has offset some of the Australian losses in other exports.
The Financial Times reports from Sydney that Australia has been able to ward off the China trade dispute as it has opened up new markets. The Financial Times says: "Covid-19, report iron ore costs, adjustments to international market demand and trade fee fluctuations make it troublesome to evaluate the exact affect of the measures. But analysts recommend diversion of trade is blunting Beijing’s potential to strong-arm Canberra, and delivering a success to China’s economic system.
For the moment Beijing’s bark is worse than its bite,” mentioned Roland Rajah, an economist on the Lowy Institute, a Sydney think-tank. “Exports to China have collapsed in the areas hit by sanctions, but most of this lost trade seems to have found other markets.”
In a recent article, Asia Times seemed to corroborate. "Indeed, China is spending more than ever on imports from Australia, given its reliance on iron ore and liquefied natural gas (LNG), two commodities commanding ever-higher prices on global markets and for which Australia is the world’s largest exporter."
However, with China importing less coal from Australia, the latter has started exporting increased quantities to India, Europe and other markets in South Asia. On the other hand, China is importing coal from Russia at double the cost and lesser-grade coal from Indonesia for the same price.
But the China-Australia trade war is set to spiral. China plans more sanctions. As the diplomatic relations go down further, there are apprehensions that China may reduce imports of Australian liquified natural gas (LNG).
Australian wine, lobster and grape exports have been hit badly. Nevertheless, The Quebec News Tribune says that Australian exporters have opened up new markets in Asia and Latin America. Even as the initial fears among the farmers and miners in Australia harden into an anti-China sentiment, exporters have been busy opening up new markets and scrambling for diversification.
It says: "Their efforts seem to be paying off, as the overall impact on bilateral trade is still weak. By 2020, Australian merchandise exports have fallen by 2% compared to 2019...". It quoted Mark Melatos of the University of Sydney as saying: “China bears the cost from the trade diversion policy because it does not buy products from the most efficient customers, nor does it obtain high-quality products.”