Week of 19 to 25 July 2021

Tai and Tehan talk

From the readout of Minister for Trade, Tourism and Investment Dan Tehan’s meeting with the United States Trade Representative Ambassador Katherine Tai:

“Ambassador Tai and Minister Tehan welcomed continuing senior-level discussions to address non-market practices, including economic coercion.”

Quick take:

Discussions between Tai and Tehan covered familiar ground, emphasising the “importance and strength of the bilateral trade relationship” and the US commitment to engaging allies to “address China’s state-led, non-market practices”. These issues were all covered in similar terms in the readout from the previous virtual Tai-Tehan meeting in March this year.

But the ongoing senior-level discussions aimed (in part) at addressing economic coercion are a potentially significant development. They were notably absent from the readout of the March meeting, and their inclusion in this readout might mean working-level progress towards joint action in response to China’s economic coercion.

As analysts have pointed out, so far Washington hasn’t been able to offer Canberra much in the way of support beyond expressions of solidarity. This is especially awkward given that the data seems to suggest that the United States is benefitting economically from China’s coercive actions against Australia.

The combination to date of strong US rhetoric and an absence of substantial support also creates a credibility issue for both the United States and Australia. As well as offering easy wins for China’s state-controlled media to excoriate the United States and Australia, the gap between words and deeds will eventually raise questions in Australia about the sincerity of US rhetorical commitments.

So, what are senior-level US-Australian discussions to address economic coercion likely to yield? One plausible scenario is nothing at all. It’s entirely possible that this reference is just a shot across the bow to put China on notice and encourage Beijing to change its ways before Washington and Canberra get serious.

Other options might include counter-coercion moves to punish China for its economic coercion of Australia. There’s also the possibility of efforts to support Australia economically via US commitments to buy Australian exports and/or not profit from the exclusion of select Australian exports from the Chinese market.

Neither of these options seem especially likely though. Counter-coercion strategies entail the serious risk of escalation, while tangible expressions of economic solidarity would be hard to sell domestically to the US private sector.

Given the recent track record of China’s tit-for-tat sanctions and well-resourced economic statecraft, counter-coercion responses could easily prompt Beijing to respond in kind by doubling down on its economic coercion with reciprocal countermeasures. (And on a sidenote, the history of deterring and shaping Beijing via coercive measures doesn’t inspire confidence.) Meanwhile, asking US coal mining states to take a haircut in solidarity with Australia seems like a political nonstarter.

So, where does this leave these senior-level US-Australian discussions? If I was placing bets, I’d wager that the most likely scenarios for joint action would be more carefully coordinated diplomatic responses and World Trade Organization (WTO) measures.

Washington and Canberra might lead a revitalised and more multinational effort to publicly name and shame China’s economic coercion. This might take the form of a leader-level communique or something similarly high-profile that could be issued at a forum such as the long-planned Summit for Democracy.

On a more concrete procedural front, there’s scope to combine this more active diplomacy with moves in the WTO. The United States and Australia might pursue a renewed and more coordinated effort to tackle China’s economic coercion via established mechanisms in the rules-based trading system.

Watch this space.

Tu quoque

Ministry of Foreign Affairs (MFA) spokesperson Zhao Lijian speaking at the regular MFA press conference on 22 July:

“The US remarks completely distort facts and confuse right with wrong.”

“The difficult situation in China-Australia relationship is the result of Australia’s moves to grossly interfere in China’s domestic affairs and undermine China’s interests, and its discriminatory trade practice toward China. The responsibility does not rest with China.”

Quick take:

MFA was quick to fire back after the Tai-Tehan meeting. The response was rhetorically changed and consistent with China’s regularly reiterated view that Australia is responsible for the economic coercion it is currently enduring.

As much as Zhao’s comments are a function of his combative personal style, they also point to the high degree of difficulty associated with any US-Australian effort to shape China’s behaviour.

This is not to say Washington and Canberra shouldn’t explore options to deter Beijing’s economic coercion. But Beijing has established a clear precedent of heaping all the blame on Canberra.

This may make conceding to US and Australian pressure nigh on politically impossible. In other words, in the absence of some kind of concession or symbolic olive branch from Australia, abandoning the line that Canberra is to blame and loosening coercive measures might be simply too much of an about-face for Beijing.

Who handled it better?

Japan’s Ambassador to Australia, Shingo Yamagami, responding to a question on Canberra’s handling of the Australia-China relationship:

“You know, you are doing an excellent job. We are in the same boat and we should work together.”

Quick take:

Given the fraught state of Australia-China relations, there’s an understandable inclination to compare and contrast the health of Canberra’s ties with Beijing with the state of relations between China and other US allies and partners in the region.

As well as being interesting analytical exercises, these kinds of comparisons are often aimed at teasing out whether there are lessons for Australia in the experiences of other countries’ efforts to maintain broadly positive relations with China. Ambassador Yamagami’s comments would seem to pour cold water on the possibility of Canberra usefully learning anything from Tokyo’s handling of the Japan-China relationship.

But it’s reasonable to assume that Ambassador Yamagami’s comments at the National Press Club were at least partially aimed at flattering his host government and advancing his own government’s goal of deepening ties between Japan and Australia. So, while the shifts in China’s foreign policy that Ambassador Yamagami alluded to are real, his comments about the state of Australia-China relations probably reflect his diplomatic priorities as much as his considered analytical judgements.

As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections very much appreciated.