Doing Business with China: An Ongoing Dispute Chloe Poole

Doing Business with China: An Ongoing Dispute

Chloe Poole

The outbreak of COVID-19, diplomatic disputes, economic coercion and trade restrictions continue to characterise the growing tensions in Australia’s relationship with China. Amidst the shaky political climate, the feud has created new laws, restrictions and perspectives for both nations. What has been emphasised amidst this climate is Australia’s perseverance in decision-making, reasonable exercise of sovereign powers and protection of its people. This article will discuss the ongoing feud between Australia and China which has highlighted Australia’s resilience.

How Did the Tensions Arise? Following the establishment of a diplomatic relationship with the People’s Republic of China in 1972, the Australian embassy in Beijing was constructed. Upon the foundations of mutual interests, economic exchange and strong trade complementarities, the bilateral relationship between Australia and China was formed. Fast forward to the current complex strategic partnership, China has quickly become Australia’s largest two-trading partner in goods and services worldwide. Although the bilateral relationship has yielded beneficial outcomes for both nations, it has come to a halt owing to the disagreement between nations.

Following the outbreak of COVID-19 around the globe, Australian Prime Minister Scott Morrison proposed a thorough investigation into the origins of the pandemic. Defying China, Morrison pursued the inquisition labelling it as an entirely reasonable and sensible course of action. China then responded to Australia’s conduct by introducing an 80% tariff on Australia’s imports from China. Consistent with the deteriorating bilateral relationship, in August of 2019, Australian Treasurer Josh Frydenberg declared that a proposed $600 million acquisition with a Chinese company was contrary to national interests. Adding further to the withering relationship, renowned Australian-Chinese journalist Cheng Lei was detained in China under unknown circumstances, fuelling the growing political pressure.

Why Isn’t Australia Enforcing Its Own Trade Restrictions? If Australia were to establish trade restrictions against China, a large portion of global support would decrease.

Due to the mutual interests and respect of international law, increasing practical blockades retaliating against China would not favour Australia’s Government. Also, appeals by the Australian Government to the Chinese administration would ring hollow and not appear as genuine. Additionally, it should be reiterated that China’s capability to exact economic damage upon Australia is much greater than Australia’s ability to inflict economic damage upon China.

International Law Obligations Amidst the current political climate, Australian Government representatives have demanded that China’s authorities make their conduct very clear and honour their commitments to the World Trade Organization (WTO) and Chinese-Australia Free Trade Agreement (ChAFTA). In response, a Chinese foreign ministry spokesperson hoped that Australia could do more to enhance mutual trust and bilateral cooperation… and bring the bilateral relations back to the right track as early as possible. In relation to the World Trade Organisation rules, Australia has repeatedly stated that China may also be in breach of certain provisions. Emphasising this point, Australian leaders have asserted that the Chinese government’s lack of engagement has prevented China’s adherence to the WTO and ChAFTA obligations. The continued feud between China and Australia has emphasised notable legal obligations which remain subject to dispute.

The 2020 Proposed Bill In September 2020, the Morrison government proposed Australia’s Foreign Relations (State and Territory Arrangements) Bill 2020 conferring the Foreign Affairs Minister the power to veto international agreements reached by any Australian state and/or territory government. The 77-page bill outlined the specific review power necessary to ensure foreign agreements did not adversely affect Australia’s foreign relations. Consistent with the levels of potential impact, the provisions range from deliberately broad to extensively narrow. Reiterating the 2020 proposed bill, the law is relevant to all arrangements between state and/ or territory entities and foreign entities, irrespective of whether the arrangements are considered legally binding. The forms of agreements including – inter alia, memoranda of understanding, contracts and other legally binding agreements. Enumerated within the bill, entities have the ability to notify the Minister about future plans to enter into an agreement. As a response, the Minister is allowed a maximum of 30 days to ascertain whether the agreement will adversely affect Australia’s foreign relations.

The Australian government has frequently argued that the new powers are not targeted at any particular country. Published explanatory notes confirm this position by noting that the new framework is countryneutral and does not target any particular foreign state, but is concerned with protecting and managing Australia’s foreign relations across all levels of Australian government. In response, China has urged Australia to adopt constructive China policy instead of a destructive one.

Legal Implications From December 2020, the Foreign Minister of Australia became a whole lot more powerful. Why? Because the Federal Parliament passed the Government’s proposed bill in full. This conferred to the Commonwealth the power to veto any agreements with foreign relations that are inconsistent with Australian foreign policy. Research Fellow at the Asia Institute of the University of Melbourne, Ms Melissa Conley Tyler, expressed that the proposed veto power created another trigger for the relationship to deteriorate. Framing this bill as a matter of principle, rather than a targeted legislative instrument, has left significant ambiguity regarding the nature and scope of this bill. Additionally, the Government’s ability to construct and pass a bill within 4 months has been the subject of criticism by several opposition leaders.

What Happens Now? In comparison to other Western nations, Australia has attempted to take a more strident approach, endeavouring to honour international law standards and mutual respect for the rule of law. However, these attempts of reconciliation and compromise have been ignored and repudiated on numerous occasions.

Despite Australia’s historical feuds with China, the nation has continued to promote flexibility and adaptability throughout its conduct. The Australian Government has remained transparent, acting in the nation’s best interests and putting its people first. Despite accusations of premature decision-making, Australia has maintained its sense of responsibility and commitment to nationhood. The nation has fostered resilience in upholding their fundamental beliefs, maintaining political and social conversations and ensuring that all decisions have been met with reason and logic. Ultimately, allowing China to make the next move.

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