“The jungle is growing back. As leaders of some of the world’s largest liberal democracies and advanced economies, we must tend to the gardening with renewed clarity, unity and purpose.”
It’s an odd analogy, one used by Prime Minister Scott Morrison ahead of the Cornwall G7 “Plus” summit tomorrow.
Despite a well-documented aversion to holding hoses, Morrison has made it clear he’d like to head up that gardening team. Tension over territorial claims, heightened economic stress, undermining laws of the sea, and foreign interference, are all issues to be pruned, and all point squarely in Beijing’s direction.
“The Indo-Pacific region, our region, is the epicentre of a new strategic competition,” Morrison said.
“The risk of miscalculation and conflict are very present and growing. We are living in a time of great uncertainty not seen, I believe, since the 1930s, outside of wartime.”
The comments were made at the Perth USAsia Centre on Wednesday discussing climate policy, diplomacy debt — and hinting at war with a nation of 1.4 billion people.
It’s the trade spat he cares about
Reforming the World Trade Organization (WTO) is high on Australia’s agenda for the G7 — it’s been on Morrison’s agenda since 2018 when Beijing first initiated an anti-dumping investigation into Australian barley exports. When that inquiry led to a 73.6% tariff being slapped on our barley, Canberra wasted little time in hauling our case before the WTO. After tariffs further spread to the wine and crayfish industries in March 2021, we moved to do the same once again.
“The most practical way to address economic coercion is the restoration of the global trading body’s binding dispute settlement system [DSS],” Morrison said.
He’s right in thinking the DSS isn’t just faulty; in fact, it’s completely broken. The highest tier of the DSS, the Appellate Body, hasn’t been able to hear a case since December 2019. In the meantime, we’ve had to move our case against China to an intermediate body set up by the EU.
A properly functioning WTO, Morrison said, “penalises bad behaviour when it occurs”. He didn’t mention the US were the ones to veto the Appellate Body out of existence in the first place.
Still, reform’s on the table for the G7: with any luck, we’ll manage to “modernise the [WTO’s] rulebook”, as Morrison said.
ANU international trade law expert associate professor Imogen Saunders tells Crikey there are a few ways this could take place. “One possible reform would be to remove the consensus requirement requiring instead [a] majority voting system among members,” she said.
That’d fix the current crisis overnight and give Canberra the high ground in regards to Chinese tariffs, but it’d also make for a “major shift in the culture of the WTO”, Sanders said — which might be a good thing. She added that it’d reflect the fact there are no longer 23 member states to the treaty, but 164.
“Another option would be diplomatic efforts to [convince] the US to allow new appointments: but the US has made clear that it will only do so if other reforms are instituted that would mostly limit the Appellate Body’s jurisdiction,” she said.
Survival ‘doesn’t just come down to climate change’
Another hot topic is cross-border carbon tariffs — an idea gaining traction in climate policy conversations in Europe, and disparaged by Trade Minister Dan Tehan as “protectionist”. The idea, from an Aussie perspective, would see domestic businesses have to purchase European carbon permits to trade in the bloc.
The EU’s Carbon Border Adjustment Mechanism isn’t off the ground yet, but if designed in accordance with WTO rules, Saunders said tariffs “will not be protectionist but rather a legitimate means of incentivising decreased carbon emissions in the production of goods”.
For European business, it’d avoid the sort of “carbon leakage” — an increase in emissions as businesses respond, or try to dodge carbon policies — their Australian counterparts used to warn about in the lead-up to Gillard’s carbon pricing scheme.
On Wednesday, Morrisons toed the party line, describing carbon tariffs as “combative”. Surviving in this brave new world isn’t just “about climate change”, Morrison said. “It’s how Australia best advances our interests as part of a world that is dealing with climate change.”
Also on the G7 agenda are debt diplomacy, the role of the Asian Development Bank, and the World Bank.
Pissing off premiers
Morrison’s address fell foul of WA State Premier Mark McGowan. “I don’t understand why he would say the system isn’t working for us when we are in that position,” McGowan told 6PR radio Wednesday afternoon.
“Other countries – the US, China, etc — they put tariffs on at various points in time and that’s obviously an issue of concern […] If I was the prime minister I wouldn’t be attacking one country in respect to that.”
The Rockingham local, who boasts an 88% approval rating in WA, also pointed out that Australia’s ability to bounce back from a pandemic trough was largely tied to iron ore, 80% of which went to China in 2019-2020. “Last year, we sold over $100 billion worth of products to China. We bought $4 billion back, so we have a $96 billion trade surplus,” McGowan said.
“We just need to be very careful in relation to our language and the way we approach these things because we could be the big losers.”
One thing’s clear — Morrison will have his work cut out in Cornwall.
Sandy Milne is a freelance writer and journalist based in Perth. His work has appeared in the SBS, Wired and The Guardian. He holds a bachelor of law from Curtin University.