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MARINE | Trade war In association with The American Club
Walking on hot coals Dimitris Seirinakis of the American Club analyses the significant impact of the Chinese ban on Australian coal for the maritime sector. As ever, major international trade disputes can lead to complex implications for shipowners and their insurance partners By now, China’s ban on Australian coal announced at the end of last year will have pricked up the ears of even the most casual observer of the maritime industry. The severity of the ban, however, cannot be exaggerated. Australia exports more to China than to its five next biggest markets combined1 and ships over 50% of its 170m ton metallurgical coal exports to China2. The trade is estimated to be worth some US$23bn. Tens of ships are stuck off China’s coastline, threatening the delicate commercial relations between shipowners, their charterers, and the interests whose cargoes they carry. This is also the latest calamity to befall hundreds of crews, compounding The Marine Insurer Nordic & Asia Special Edition | April 2021
their already deteriorating mental and physical wellbeing caused by their prolonged stay on board because of Covid-19.
CAUSE OF THE DISPUTE In retrospect, the inevitability of what is now a full-blown trade war between China and Australia, should have been obvious as far back as May last year. It was around that time that China’s ambassador to Australia, Cheng Jingye, warned the “Lucky Country” that it was treading on dangerous ground by pressing for an independent inquiry into the origins of the coronavirus. A reference to ordinary Chinese not wanting to “drink Australian wine, eat Australian beef” should have left the Australian authorities in no doubt as to China’s intentions. By the end of May 2020, China had placed tariffs of over 80% on Australian barley and banned beef from Australia’s four biggest abattoirs. The abattoir ban alone blocked an estimated 35% of Australia’s exports of beef to China. Australian barley growers send around half of their annual exports to China (US$393m). The tariffs all but killed the trade3. It was, therefore, little surprise that, in October 2020, one of The American Club’s China-based Correspondents (Oasis P&I) reported of substantial delays to vessels carrying
