China, Australia Trade Ministers Have ‘Candid’ Talks in Beijing

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(Bloomberg) -- China and Australia’s trade ministers held their first in-person economic dialog since 2019 on Friday, with both sides pushing to resolve some of the areas of dispute that had poisoned relations.

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“I am very confident that as a result of this face-to-face discussion today that we are well on track to getting a stable, normal relationship with China,” Australian Trade Minister Don Farrell told reporters after a meeting and dinner with Chinese Commerce Minister Wang Wentao.

We “had a very warm and constructive and I have to say candid meeting, at which we both raised issues of concerns to our respective countries,” Farrell said, adding that more work needs to be done to resolve outstanding problems such as China’s tariffs on Australian wine.

Farrell touched down in Beijing a day earlier, marking the second major visit by an Australian minister to China since the two nations began repairing ties in the wake of the election of a new government a year ago. Canberra is hoping to negotiate an end to sanctions on billions of dollars worth of its agricultural exports, while China is pushing for better access for investment and Australia support for it to enter the Comprehensive and Progressive Trans-Pacific Partnership trade deal.

Speaking shortly after his arrival, Farrell said he was in Beijing to make progress in “stabilizing our trading relationship with China.” In the meetings, Farrell said he raised all of Canberra’s issues, including the cases of two Australian citizens held by China on national security grounds.

While China is Australia’s largest trading partner by a wide margin, relations between the two began to deteriorate in 2017 amid growing concerns in Canberra over foreign interference in its domestic politics, Australia’s decision to ban Chinese firms from participating in the 5G phone network rollout and other issues. Tensions came to a head in April 2020 when then-Prime Minister Scott Morrison called for an international investigation into the origins of Covid-19 in Wuhan.

That infuriated Beijing and prompted Chinese authorities to take punitive action on a range of Australian exports including coal, barley and wine. The key iron-ore trade remained untouched by the dispute.

Since the election of the new government in Canberra, relations have steadily warmed. Imports of Australian coal have resumed while Beijing announced in April it would be holding a review into tariffs it placed on barley imports. In return, Australia announced it would temporarily pause its case against China in the World Trade Organization.

Speaking ahead of his visit, Farrell said he was hopeful of resolving both the barley and wine tariffs by the end of 2023, while Australia is also keen to remove the remaining barriers on other agricultural exports including beef, dairy and lobsters.

In turn, China wants to have access to more opportunities to invest in Australia, a sensitive issue given that Canberra is closely tied to the US on security and relations between Beijing and Washington are extremely strained. China concerns about the investment environment in Australia were discussed at the meeting, according to Farrell, who noted that Australia had approved over 270 investment deals by Chinese firms worth A$4.8 billion ($3.2 billion) in the last financial year.

“There are many Chinese investments being successfully approved in Australia,” he told reporters in Beijing. However, “like all countries we reserve the right to make strategic decisions about foreign investment, particularly where it involves state owned companies.”

In addition to requests on investments, Wang also indicated China wanted to be considered as a candidate to join the CPTPP trade deal. China applied to join the deal in mid-2021, but nothing has happened since, with Taiwan’s subsequent application to join and some members’ reticence to let China join stymieing any chance of accession for now.

Farrell said late last year that there’s no prospect that China could join the deal. While his comments in Beijing on Friday were not as negative as then, they don’t suggest a welcoming attitude.

“The Chinese minister indicated that they would like to be considered for accession to the CPTPP,” he said. “I indicated that they we still haven’t finally resolved the issue of the United Kingdom’s accession,” noting that joining the deal requires the unanimous consent of all the countries who are members.”

Wang accepted an invitation to visit Australia, according to Farrell, who noted the two would meet again soon at an Asia-Pacific Economic Cooperation meeting in Detroit. The two nations are also discussing when Chinese Foreign Minister Qin Gang will visit Australia, Farrell said.

(Updates with comment in third paragraph.)

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