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Past Political Plays Could Transform Trade Woes Into Wins for Australia and China

02 Dec 2021
By Hannah Bretherton
Secretary of State for International Trade, Liz Truss chairs a CPTPP Head of Mission Roundtable, in the Foreign and Commonwealth Office. Source: Pippa Fowles / No 10 Downing Street.

Tensions between Australia and China have been on the rise. Lessons from political history could reveal a pertinent solution.

During an unequivocally low point in the history of Australia-China relations, it is hard to imagine the possibility of emerging from this current period of tension. The mirage of greener pastures is increasingly slipping from view. China’s global economic weight has never been stronger, and its ensuing bellicosity is unprecedented. As Australia and China approach the end of another year of fragmentation, there is fresh opportunity to reflect on how best to navigate a way forward.

Cooperation is Intrinsic to Global Trade and Essential for Resolving Global Challenges

The inexorable nature of global issues – ranging from public health to climate change to supply chain stability – has resoundingly illustrated the need for a coordinated global response and called attention to the dearth of effective, cooperative frameworks in which to do so.

Trade, in its most basic essence, cannot function without a devotion to openness and cooperation. As one of the eleven parties to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which requires unanimous approval to allow additional members, Australia is facing a juncture in which it can play a significant role in enabling greater cooperation with China. It’s a rare and refreshing thought that at this exact moment, Australia holds a valuable card, while China has not yet been given a seat at the table.

China is Fervently Campaigning to Join one of the World’s Largest Trading Blocs

In its submission to the Australian parliamentary inquiry into expanding CPTPP membership, the Chinese government presented a compelling case that underscored Australia and China’s “highly complementary” economies, optimistically noting “enormous potential in cooperation.” The conspicuously upbeat tone demonstrates that China is all too aware of the significant task on its hands in seeking admission to this substantial free trade pact, whose current membership contributes to 15 percent of global trade.

Since its initial pitch to join, China has embarked on a marketing campaign that attempts to portray an enthusiastic response from existing CPTPP members. Following a busy month of phone calls from China’s foreign minister, Wang Yi, Beijing released a string of official statements asserting that Malaysia, Singapore, Mexico, and Chile “welcome” and “support” China’s bid.

The Reaction to China’s Bid from Existing CPTPP Members Has Been Tepid

While officials from Malaysia and Singapore matched China’s zeal, the reception from the remaining nine CPTPP members has been lukewarm. Mexico’s undersecretary for foreign trade, Luz Maria de la Mora, firmly stated that any new member accession would need to “maintain or improve the standard… no exceptions, no special treatment.” In a similar style, New Zealand Trade Minister Damien O’Connor steadied the focus on the importance of high trade standards.

Japanese Prime Minister Fumio Kishida ventured further by openly questioning whether China could meet the current standards. A representative from Vietnam simply stated its willingness to “share information” with China on how to seek admission. Chile, Canada, Peru, and Brunei have refrained from any official comment.

The response from Australian Trade Minister Dan Tehan was issued in conjunction with what some are viewing as a prerequisite and others an ultimatum: that Beijing must renew ministerial dialogue with its Canberran counterparts if there is to be any discussion on the CPTPP.

There are a myriad reasons for the tepid atmosphere surrounding China and the CPTPP, ranging from the notion that it’s a disingenuous ploy designed to block Taiwan’s subsequent bid, to an age-old power play against the US, or that it was timed as a distraction from the AUKUS announcement.

Against the backdrop of its relationship breakdown, as Australia wrangles disputes with China at the WTO, it’s unsurprising Minister Tehan is tentative about new trade talks. Yet, the grim state of the relationship is precisely why Australia must seize this moment and use it as a catalyst to redirect towards constructive bilateral engagement. It’s not the first time Australia has needed to do this and it’s unlikely to be the last.

Turning to Lessons From the Past May Help Thaw Australia-China Relations

An option for a viable path forward can be drawn from 1996, when the newly installed Howard government presided over a series of diplomatic blunders, including public support for the US in the Taiwan Strait Crisis. Ministerial talks were frozen, and Australia-China relations hit the lowest point since the fallout from Tiananmen Square.

Despite all of this, then-Prime Minister John Howard was determined to pursue and strengthen Australia’s economic relationship with China. He managed to push ahead with a formal visit to Beijing in 1997 and emerged triumphant with the nascent concept of an “economic strategic partnership” and a new mechanism for debating human rights.

Howard established the bilateral human rights dialogue as a way of subsuming discussion so that Canberra could raise concerns with Beijing behind closed doors. He also homed in on economic ties as an area of commonality to make headway through political deadlock.

This was typical of Howard’s pragmatic, if not cunning, approach to foreign affairs. It provides a lesson political leaders might consider heeding for increasingly intractable matters today.

Focusing on Complementarities Can Provide a Pathway for Cooperation with China

Chinese President Xi Jinping recently signalled that this approach remains relevant in contemporary foreign policy, averring to “seek common ground while reserving differences” in his November meeting with President Biden. This is not to suggest that Canberra should sidestep sensitive issues. Rather, it should find common ground to re-establish ministerial dialogue with China, to create a vital avenue through which Australia is much better placed to raise concerns.

Trade with China is increasingly challenging, yet it also remains an area in which cooperation is key. Australia, both in its approach to repairing relations with China and as a member of the CPTPP, could heed the words of Howard to “focus on things we agree on.”

The CPTPP Provides a Much-Needed Canvas for Multilateral Engagement

Included first and foremost in the things CPTPP members should agree on is that they will not compromise on the quality of the agreement for any new accession. Secondly, members should agree that the CPTPP is an opportunity to work cooperatively on increasing global trade to aid the post-pandemic economic recovery. Finally, members should agree that the CPTPP can be leveraged as a constructive framework for multilateral engagement with major economic powers who apply to join – particularly those who are difficult to negotiate with.

As 2021 draws to a close, the stakes for Australia-China relations may appear higher than ever. Yet this is not unchartered territory – Australia has weathered severe storms in the past. Remembering this, in addition to the strategies and tools at Australia’s disposal to extricate itself from the present impasse, provides a semblance of hope that Australia’s economic and geostrategic future may yet be salvaged.

Hannah Bretherton is Global Impact & Engagement Manager at the Lau China Institute, King’s College London, and co-Founder of the China Puzzle. She was previously a policy advisor in the NSW Government and researcher at China Matters and the Australia-China Relations Institute, UTS. The opinions expressed are her own. Twitter: @hcbretherton @PuzzleChina

This article is published under a Creative Commons Licence and may be republished with attribution.