Trade Minister Don Farrell has told the ABC he will be asking his Chinese counterpart to remove trade blocks on Australian lobster and wine when he meets with him in less than two weeks.
Mr Farrell has revealed he will hold a meeting with Chinese Commerce Minister Wang Wentao at the World Trade Organisation conference in Abu Dhabi on February 26 where wine and lobster will be “on the table, if not on the menu”. He said he would also be raising the issue of several Australian abattoirs that remain suspended by China.
China’s tariffs on Australian wine — imposed amid a diplomatic fallout in 2020 — are widely expected to be lifted next month. However, if they were not, Don Farrell said “we will immediately resume our World Trade Organisation dispute — and we’ve made that very clear to the Chinese authorities”.
While the minister said it was too early to say when Chinese trade might resume for the lobster industry, he said the WTO meeting would give him a better idea of timing.
Mr Farrell said his Chinese counterpart Mr Wang “enjoys Australian red wine” and has been invited to visit the minister’s family vineyard in South Australia’s Clare Valley to try it at the source.
‘We lost everything overnight’
Victorian winemaker Meg Brodtmann has been busier than usual over the last few weeks at her vineyard outside of Melbourne.
With the Lunar New Year and the expected resumption of trade with the industry’s most important export market, Ms Brodtmannn has been hitting the phones and dusting off the Chinese language labelling that has been sitting idle for the past few years.
“We’re gearing up for it to happen,” Ms Brodtmann said of the removal of wine tariffs of up to 200 per cent, expected to happen at the end of next month.
“The person that we employ in China, we’ve now got her back on board with translating all our marketing material back into Chinese, which we haven’t had to do for a couple of years. We’re sending out Chinese New Year messages.”
When China slapped hefty trade tariffs on several Australian sectors in 2020 it effectively halted exports from those sectors and Ms Brodtmann said the impact on her industry was swift and sharp.
“We lost everything overnight,” she told the ABC from her Yarra Valley winery, “China was our biggest export market.”
The wine industry was one of those hit hardest by the tariffs, which were the result of a diplomatic dispute between China and Australia, after Australia called for an inquiry to investigate the origins of COVID at the start of 2020.
“I think China felt very angry by that, and they thought they would use economic coercion as a way of punishing Australia for the announcement,” said economist and China expert Tim Harcourt.
China soon after imposed an 80 per cent tariff on Australian barley.
Next it banned imports from some major Australian abattoirs over health concerns. In October of 2020 timber, cotton, coal and copper were the next industries to face sanctions and other trade blocks. In November lobsters and wine were added to the list. The total value of the sanctions was around $20 billion in Australian exports.
Australia launched an appeal with the World Trade Organisation over the wine tariffs, but then suspended it last October after China said it would hold a five month review of the tariffs, with the expectation it would remove them during that period. The five month period ends on March 31.
The diplomatic freeze between the two countries lasted years and only began to thaw out in the middle of 2022 when high level political contact started to resume and China began to lift sanctions on several industries. Now all that remains is lobster, wine and some abattoirs.
Another sign of the warming relations was a visit by Anthony Albanese to China in November, which followed the release of Australian journalist Cheng Lei in October. But the relationship hit a snag a week ago with the announcement that Australian citizen and pro-democracy activist Yang Hengjun had been handed a suspended death sentence.
Trade Minister Don Farrell said he would also be raising that issue with his Chinese counterpart in Abu Dhabi.
“The Australian government was appalled by the conviction and the penalty of Mr Yang, but we have embarked upon a project process of stabilising our relationship with the Chinese government. And we will continue that process.”
Trade minister optimistic ahead of WTO meeting
Wine is next in line to have tariffs removed, with that announcement set to be made by the end of next month.
Ms Brodtman said the industry was told it was all but a done deal and wine makers have already began preparations to send their product back to China, however in an interview with the ABC yesterday, Trade Minister Don Farrell was deliberately cautious in his language and said while it was expected wine tariffs would be lifted it was no fait accompli and the Australian government wouldn’t hesitate to re-launch its WTO dispute if the tariffs remained past March 31.
However he said he was optimistic about progress on negotiations to remove the tariffs and bans.
“We are close to resolving all of the outstanding issues,” he said.
The minister had previously said lobster and beef would be on Chinese consumers’ dinner plates by last Christmas, which did not eventuate.
Despite the impact on individual industries and businesses, economist Tim Harcourt told the ABC that he doesn’t believe the sanctions had the intended effect on Australia’s overall economy.
“Amazingly, at a macro level, the Australian economy chugged along better than most in the OECD. And China-Australian trade wasn’t really impacted a great deal because of the dependence that China has upon Australia.”
Both countries, he said, relied upon one another economically, whatever the political or diplomatic situation may be, and Mr Harcourt said he believed the sanctions backfired on China.
“The famous economist Joan Robinson said that putting tariffs up is like putting rocks in your own harbour. And China certainly put a lot of rocks in their own harbour to not much economic or geopolitical gain. So probably they’ll think twice about doing it again.”
Rock lobster industry struggling amid China ban
The rock lobster industry is also eagerly awaiting the removal of the ban from China, but unlike wine, they have no indication of when that reprieve might be granted.
China is by far the biggest market for Australian lobster — over 90 per cent of rock lobsters were sent there before China banned the export in 2020, citing fears of contamination, which the Australian industry denies.
“The last three fishing seasons have been the most turbulent we have experienced in the history of the fishery. China has been our dominant market for over four decades,” Kyriakos Toumazos told the ABC from a boat full of lobsters in an Adelaide port.
The executive of the South Australian Northern Zone Rock Lobster Fishery said the industry has been struggling to stay afloat since the bans were put in place.
“The industry really has survived only because of the resilience that people that are involved in the industry have,” he said.
While the industry, like wine, has tried to focus on supplying to domestic customers while pivoting to new overseas markets like Hong Kong, Vietnam and Singapore, it hasn’t made up for the high price that lobsters were able to fetch in China.
“We have diversified our market as much as we possibly can. Having said that, however, China still remains the strongest market for our product.”
Like other industries, it is widely believed that Australian lobster is circumventing the ban and making its way into China through back channels, such as Hong Kong and Vietnam. The suggestion is backed by data which shows that following the 2020 ban lobster imports into Hong Kong from Australia suddenly jumped 2000 per cent.
The industry said however it played no part in these grey or black markets and instead hoped it was genuinely growing new markets in other parts of Asia while China was on ice.
“We supply products to destinations that are approved, which is Vietnam, Hong Kong, Taiwan, all those destinations are approved destinations for us,” Mr Toumazos explained.
“So we supply customers in those jurisdictions and we are not aware of what happens to that product after it lands.”
While the rock lobster industry is trying to keep optimistic about the prospect of the ban being lifted, the waiting game is testing their patience.
“Unfortunately, we have not been hearing any more positive news,” Mr Toumazos said.
“Nothing has been given to us as far as a final expected time frame. So it is going to be still turbulent for quite some period.”
“We are just being optimistic that over the calendar year of 2024 we will slowly start trading again with our biggest business partner and hopefully the industry can start rebuilding the future that it deserves.”