Week of 20 to 26 September 2021

Australia’s economic statecraft

Minister for Trade, Tourism and Investment, Dan Tehan, addressing the National Press Club on 22 September:

“[Australia’s] economic statecraft is principled; proactive and, where necessary, patient.”

“We … act to support and promote the rules-based trading system, whether it be bilaterally, regionally or multilaterally.”

“And while we are being patient [with China], we are also being proactive in supporting Australian exporters to diversify their international customers by expanding our extensive network of bilateral and regional free trade agreements, resolving non-tariff barriers and supporting new opportunities through our domestic programs, such as the Agri-Business Expansion Initiative.”

Quick take:

Minister Tehan’s speech is a significant and strong statement of Australia’s strategy and goals. The speech makes plain that Canberra is under no illusion about the geoeconomic realities of a world in which state’s increasingly use economic policies to pursue national strategic objectives. Yet the Minister’s clear message is that Australia will not resile its commitments to trade liberalisation and the rules-based multilateral trading system. Equally, despite the duration and intensity of China’s use of economic coercion against Australia, Canberra is still open to dialogue and is waiting for Beijing to come to the table.

In response to China’s economic coercion, many proposals have been put forward for Australia and its allies and partners to pursue various counter-coercion measures. These measures are aimed at economically pressuring China in a bid to stop China economically pressuring Australia. Although not addressing these kinds of policy proposals explicitly, Minister Tehan’s speech suggest that Australia is highly unlikely to incorporate these kinds of policies into its strategy. Such counter-coercion economic pressure campaigns would sit extremely uneasily with Canberra’s strong and enduring support for the rules-based global trading regime.

Regardless of Minister Tehan’s relatively conciliatory emphasis on patience towards China, Beijing should not take much comfort from the speech. Australia’s strategy and goals as laid out by the Minister imply that Canberra will get on with the complex and challenging tasks of trade diversification and seeking remedy for economic coercion via World Trade Organization processes. The scope and severity of China’s trade restrictions notwithstanding, there are no signs that Canberra will offer up the kinds of political, policy, and diplomatic concessions that Beijing has sought as a precondition for rolling back economic coercion.

Moreover, the speech strongly implies that China’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will be nigh on impossible without thawing somewhat the high-level diplomatic deep freeze Beijing has inflicted on Canberra. Minister Tehan pointedly observed: “One of the most important things about negotiating the accession process of any country into the CPTPP is that you have to be able to sit down at ministerial level, look your economic partner in the eye, and talk about that accession process.” This unambiguously makes a return to ministerial dialogue with Australia a minimum precondition for China’s CPTPP accession. Of course, debate still swirls about the sincerity and broader viability of China’s bid for CPTPP accession. But if it is in fact genuine/realistic, it may be the first step towards the resumption of long-frozen ministerial contact between Beijing and Canberra.

National Press Club address [Dan Tehan/Twitter]

China as a Quad partner?

The Prime Minister Scott Morrison speaking at a doorstop in Washington on 24 September:

“The Quad is a partner, whether it be for China or it be any other country that is in the Indo-Pacific region.”

Quick take:

Seeing China referred to as a possible Quad partner on the same day as the first in-person leader-level Quad meeting makes for unexpected optics. On one level though, this diplomatic olive branch to Beijing is unsurprising. Many—including China’s own Ministry of Foreign Affairs, it would seem—view the Quad’s primary strategic purpose as targeting and isolating China and counterbalancing its power. Regardless of whether these assessments are accurate, they provide a strong rationale for Quad leaders such the Prime Minister to at least seek to allay fears that the Quad constitutes a form of anti-China coalition.

The prospects of a Quad-China partnership are somewhere between non-existent and “doomed to fail.” But raising such a possibility might still be a useful tactic as part of a broader strategy of seeking to counteract concerns about the Quad’s intentions. So, the messaging doesn’t mean that anything has changed in terms of the Quad’s strategies and goals or the disquiet that it elicits in Beijing. But with this continuity also comes an enduring rationale for the Prime Minister’s warmer and more conciliatory Quad messaging to China.

Singing from the same song sheet

The New Zealand and Australian Trade Ministers’ Joint Statement on 20 September:

“Ministers reiterated their concern over the use of coercive economic practices, and noted the threat these practices pose to the integrity of the multilateral rules-based trading system.”

Quick take:

By my count, this is the second bilateral Australia-New Zealand joint statement raising concerns about economic coercion. Along with Tokyo and Washington, this makes Wellington one of Canberra’s most willing partners in its efforts to internationalise concerns about economic coercion. Not only is New Zealand willing and able to step up and join Australia in opposing the use of trade to apply political pressure, but it’s also amenable to explicitly highlighting the associated dangers for the rules-based global trading system in general. So, regardless of their different views of nuclear-power submarines and aspects of China policy, Canberra and Wellington are still extremely closely aligned on key strategic questions such as the importance of the global rules governing trade.

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