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What's going wrong with our trade with China? Why are our exports being suspended? - ABC News

Tensions between China and Australia have been simmering for a while now and the rocky relationship could be about to head to a whole new level.

After hitting our barley and then our beef exports, now it seems China could be turning its back on a big chunk of our other commodities — starting, potentially, from today.

Have no idea what's going on? Here are five quick questions to bring you up to speed.

What's happened so far?

It's been a rough six months for Australians exporters selling farm produce into China.

It kicked off with the introduction of hefty tariffs on the barley trade, and the suspension of some Australian abattoirs back in May.

At the time there was broad speculation the sanctions were some sort of punishment of Australia after it called for an independent review into the origins of coronavirus.

Chinese authorities have since launched an investigation into claims Australia has dumped wine, and according to the Australian cotton industry, told spinning mills to stop buying Australian-grown cotton.

Australia's barley farmers fell victim to trade tensions with China, after it announced major tariffs.(Tara De Landgrafft)

Exporters were already on edge, but things really went up a notch this week, when $2 million worth of Australian rock lobsters were left on the tarmac at a Shanghai airport.

Chinese customs claimed they were testing for chemicals but the delays meant some rock lobsters had to be destroyed.

At the same time, a shipment of Queensland timber was also held up at Chinese customs and the exporter, Emerald Grain, was suspended from trading barley to China.

Importers in China then started telling their Australian exporters they'd been warned by customs officials not to buy sugar, barley, red wine, timber, coal, lobster and copper.

To cap it off, word came that China's Alcoholic Drinks Association has asked its government to place retrospective tariffs on Australian wine.

What could happen to Australian exports today?

Basically, Chinese importers say they've been told by authorities that none of their Australian goods will clear quarantine after today.

Australian exporters say they've received nothing official from the Chinese Government and are waiting to see what, if anything happens at China's ports.

But they're beyond nervous. Some wine exporters have already delayed shipping exports, while rock lobster fishers are considering whether it's even worth taking the boat out.

As one exporter told the ABC, "China's put enough risk in the market it doesn't matter what happens on Friday, everyone is spooked".

And that's a very big problem given how much Australia relies on China to buy our farm produce.

Almost one third of our farm exports are sold to China — we haven't been that reliant on one market since the 1950s, when we shipped most stuff off to the UK.

What's really keeping exporters up at night is it's not clear what will happen to all their produce.

Why should I care?

Before you get carried away, this doesn't necessarily mean cheap lobsters and wine for everyone at Christmas.

Australians are good eaters and drinkers, but we're unlikely to match the appetites, or wallets, of 1.3 billion Chinese people.

Other nations around the world will be keen to buy some of our goods, but they may not be prepared to pay as much for it as China has.

Two glasses of red wine.
Wine is among a list of exported commodities, including sugar, copper, wool and cotton, that is being suspended.(Pixabay)

At a time when the economy's already been hit by the pandemic and our unemployment rate is nearly seven per cent, losing a major customer isn't good news.

While there's still a lot of 'ifs' concerning what China may or may not do, the worst-case scenario is pretty grim.

That said, China still spends a tonne on Australian goods, the tensions are getting worse, not better and don't seem to be easing anytime soon.

What's the Australian Government doing about it?

Waiting on a call, basically.

Trade Minister Simon Birmingham still can't get his Chinese counterpart on the phone.

This week he called on China to clarify its position on the suspensions, saying if they're not politically motivated then exporters need to know why their goods are being blocked.

"The door is open … the ball's in their court," he said.

Simon Birmingham.
Trade Minister Simon Birmingham has called for the Chinese Government to speak directly with his office.(ABC News: Matt Roberts)

What options does Australia have?

It's a tough one.

The writing's been on the wall for a few years now in terms of Australia's dependence on China.

The Government could argue it's attempted to open up to new markets, but some traders would say much too slowly.

A free trade agreement signed with Indonesia earlier this year will help some industries, while others wait to see what comes of the impending trade deals with the EU and UK.

It doesn't really help wine exporters now, though, with containers of wine sitting on the water.

Or farmers now harvesting barley crops they planted believing China would pay top dollar — their appeal on the barley tariffs was rejected by Chinese authorities just last week.

Now, the Australian Government is considering taking China to the independent umpire — the World Trade Organisation — something Australia hasn't done since it signed its free trade agreement with China.

It'd be a pretty bold move and some farmers are all for it, while others say going to the WTO over barley is like punching our best customer on the nose.

Like most of the trade spat so far, what happens next is still unclear.

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2020-11-05 18:48:00Z
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