Between the bushfires, Covid-19 and rising trade tensions with China, 2020 was an extremely challenging year for many Australian exporters. So what will 2021 bring? Can the Morrison Government secure trade deals with the United Kingdom and European Union? What will be the effects of the restoration of multi-lateralism in the new Biden Administration’s foreign policy and what will be the impact on the Asia-Pacific region ?
What seems clear, early into 2021, is that China appears set to continue to have an increased risk profile for trade. Beijing’s prickly posture will force Australian exporters to explore new markets.
With that in mind, our progress toward trade agreements and new export opportunities with old friends from the United Kingdom, the United States and European Union (EU) could not have come at a better time.
Just as many companies had to pivot in 2020, the Australian Government realized that it could no longer take for granted China’s position as our largest trading partner, and that new trade barriers imposed by China on Australia meant new markets would need to be found.
Australia’s Trade Minister told industry last November “I know Australian businesses while working through some of these troubled times to maintain access and to deal with practical challenges in the China market are also alive to the other opportunities…We are actively encouraging Australian exporters and investors to consider their options in emerging markets like India, Vietnam and Indonesia.”
With the UK recently finalising its trade agreement with Europe following Brexit, a deal with Australia will be given new focus following the third round of negotiations held late last year. These negotiations made progress towards a bilateral agreement that delivers new and improved opportunities for Australian companies across financial services, digital trade and improved market access for agricultural products. A recent piece penned by Australia’s High Commissioner to the UK, the Hon George Brandis QC, published in London’s The Telegraph newspaper should leave no doubt that this deal is an absolute priority for the Canberra-London relationship. His words will loom large as officials meet for the fourth round of negotiations, expected in late February.
What does the Biden Administration mean for trade with Australia?
Between reflexive protectionism and the rejection of the global trading order, the Trump Presidency was often a roller coaster in relation to trade – especially the trade war with China and the proposed aluminium tariffs for Australia. President Biden is expected to be more predictable and traditional, as Washington seeks to reform the World Trade Organization (WTO) to better deal with the challenges facing the rules-based trading system. While Joe Biden championed the Trans-Pacific Partnership as vice president, he has since said he will seek to renegotiate the pact before the US rejoins. He will do that to neutralise attacks from protectionist warriors in the Congress and media, and to be seen to be protecting American jobs in the Mid-West manufacturing states, which he turned blue in November’s election.
Australia will be looking to work with the US to deliver a more effective World Trade Organisation to drive open and rules-based international trade, particularly as a counter to Chinese protectionism and antagonism. The Government has recently adopted a more forward-leaning stance, flagging its intention to appeal to the World Trade Organization over China’s decision to impose huge tariffs on Australian barley.
Businesses and industry have also already recognised the new world trade reality.
Annette Kimmitt, the CEO and Managing Partner of one of Australia’s largest law firms, Minter Ellison said recently:
“Heightened global trade tensions and COVID-19 have exposed the limitations of some existing supply chain models. In their place, we are seeing the first stages of a new trade era, where businesses and governments are exploring alternative markets, supply chain diversification …and potentially new opportunities in international markets.” As we were reminded throughout last year, change is the only constant. In the rapidly changing trade landscape, Australian businesses need to keep an eye out for fresh opportunities and converting them into new income streams over the medium term. The new trade era is upon us.”
By Matt Williams, Newgate Australia
Matt is a former Federal Member of the Australian Parliament, former Member of the Defence, Foreign Affairs and Trade Parliamentary Committee and was an adviser to the Australian Trade and Investment Minister.