Trade
Albanese must aim beyond bilateral outcomes on Beijing visit
Australian Prime Minister Albanese is visiting China, Australia’s largest trading partner, on the anniversary of the establishment of diplomatic relations between the two countries. The economic relationship is crucial, but they also need to address the challenge of carbon emissions and climate change. The two countries have disagreements but should adhere to the principles that guide their relationship. The relationship is important globally and regionally, and Australia must prioritize these principles in its dealings with China. The multilateral trading system is essential for prosperity and security in the Asia Pacific region.
Prime Minister Albanese’s Visit to Beijing on Anniversary of Australia-China Diplomatic Relations
Authors: Shiro Armstrong and Peter Drysdale, ANU
Prime Minister Albanese is set to visit Beijing this week, marking the anniversary of the historic trip made by then Opposition Leader Gough Whitlam in November 1971. This trip led to the establishment of diplomatic relations between Australia and the People’s Republic of China. The relationship between the two countries has grown significantly over the years, guided by principles of mutual respect, non-interference, and peaceful coexistence.
Strong Economic Relationship between Australia and China
China is Australia’s largest trading partner and the largest trading nation globally. In 2023, Australian exports to China exceeded A$200 billion, making Australia the third-largest import supplier for China. Both countries heavily rely on each other for key raw materials and energy, highlighting the fundamental complementarity of their economic engagement. However, the economic relationship also necessitates addressing the shared challenge of carbon emissions and climate change.
The Importance of Upholding Multilateral Rules and Commitments
While Australia and China may have disagreements due to their different political systems and histories, the six principles underpinning their relationship provide a framework for deep economic and political cooperation. Both countries have a responsibility to conduct their relationship in accordance with multilateral rules-based agreements they have ratified. Protecting the international rules-based order is crucial for the stability and prosperity of the Asia Pacific region, making it a top priority in Australia’s dealings with China and globally. Prime Minister Albanese’s commitment to a global strategic path with these objectives and principles sets a positive tone for his visit to Beijing and the expected summit meeting between President Biden and Xi in San Francisco.
Source : Albanese must aim beyond bilateral outcomes on Beijing visit
Trade
Policy failure with Italian characteristics?
Italy’s participation in China’s Belt and Road Initiative may end in 2024. The decision to join in 2019 led to political and economic costs that have not been offset by expected benefits.
Italy’s Withdrawal from the Belt and Road Initiative
Italy’s participation in the Belt and Road Initiative (BRI) may soon come to an end, as the country entered China’s initiative in March 2019. A Memorandum of Understanding (MoU) was signed in Rome by former Italian prime minister Giuseppe Conte and Chinese President Xi Jinping. Less than five years later, the whole BRI story risks becoming a major foreign policy failure for Italy.
Debating Italy’s Participation in the BRI
The MoU will be automatically extended in March 2024, unless terminated by either party at least three months in advance. As the deadline approaches, the government of current Prime Minister Giorgia Meloni is expected to announce its decision soon. In 2019, the Conte I government’s decision to sign the MoU was made amid a heated yet highly ambiguous political debate.
The Downside of Italy’s BRI Gamble
Italy’s gamble in joining the BRI has not paid off as expected. Critics have scrutinized Italy’s involvement in the BRI, and the COVID-19 pandemic has affected anticipated economic benefits. As a result, Italy has been unable to fully leverage the MoU and engage effectively with Chinese stakeholders, leading to a shift away from emphasizing its involvement in the BRI.
Trade
Australia’s troubled EU trade deal still second best
The proposed trade agreement between Australia and the EU is in trouble due to EU protectionism, particularly in agriculture. This offers lessons for both parties and poses a potential threat to the Asia-Pacific region’s trade diplomacy.
Trouble in the Australia-EU Preferential Trade Agreement
Author: Ken Heydon, LSE
After five years of intense negotiation, the proposed preferential trade agreement (PTA) between Australia and the European Union is in trouble. On 29 October 2023, talks were suspended, with little immediate prospect of resumption. This setback, plus other recent developments in EU preferential trade policy, offer some broad lessons — for both Australia and the region.
Issues and Challenges
The failed negotiation is, in part, a victim of current times. With liberal trade policy in retreat, government-fuelled industrial policy is on the rise, and, according to the Eurobarometer Poll of July 2022, the majority of Europeans now view protectionism positively. The immediate cause of breakdown in the talks was, unsurprisingly, agriculture. This is the sector that, given EU intransigence, was a key factor in the failure of the Doha Development Round of multilateral trade talks.
Implications and Lessons
Australia’s particular concerns during negotiations with Brussels arose from EU resistance to opening up its market to Australian beef and sheepmeat, and protective geographical indications that would restrict the labelling of Australian feta cheese and prosecco. As highlighted by the WTO Trade Policy Review of the EU, the number of products subject to EU ‘geographical indication protection’ continues to rise. Looking ahead, there are still some broad strategic factors that might favour a deal. For the European Union, this includes gaining secure access to Australia’s critical minerals, such as lithium and copper.
Source : Australia’s troubled EU trade deal still second best
Trade
New US–China working groups bridging bilateral gaps
US-China economic and financial working groups established in September 2023 aim to stabilize relations and prevent economic decoupling, addressing trade imbalances and fostering dialogue between the world’s largest economic powers.
US–China Economic and Financial Working Groups
The establishment of the US–China economic and financial working groups in September 2023 marked a significant turning point in the often uneasy relations between Washington and Beijing. In the midst of increasing tensions due to great power rivalry, these working groups have the potential to promote greater stability between the world’s two largest economic superpowers.
Challenging the Notion of ‘Decoupling’
While ‘decoupling’ has become a popular term representing the United States and China’s efforts to separate their economies, the establishment of the working groups challenges this idea to a certain extent. Policymakers on both sides understand the risks associated with complete economic decoupling, as bilateral economic ties are characterized by intrinsic interdependence.
Promising Benefits and Potential Challenges
The working groups, supported by high-level officials from both countries, offer a structured channel for ongoing dialogue. They have the potential to promote trust, transparency, and direct communication while also addressing challenges such as structural trade imbalances and intense rivalry in high-tech competition.
Source : New US–China working groups bridging bilateral gaps
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