The one divergence in the approach has been Australia’s suspension of its World Trade Organisation 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.
The Chinese Communist Party has already made hay with Australia’s decision through its mouthpiece, the Global Times.
Pulling out of the case was a judgment 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 Secretary Lloyd Austin noted its significance as “legally binding and … final”.
This 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 these 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.
The worst possible path for trade policy is that we revert to an era in which economics is separated from security and sovereignty – an approach Australia took for years until the second half of the 2010s.
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 – a fact that is increasingly reflected in the attitudes of Australia’s like-minded partners.
The OECD ministerial meeting held on Thursday produced an important 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 here among countries that want to improve collective resilience against future coercion.
Australia must 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.
Justin Bassi is the executive director of the Australian Strategic Policy Institute.