A trade stoush thats smashed australian businesses. Michael blake only last night, i had a fisherman on the phone crying to me, you know, wondering how hes going to pay his bills. And yeah, this is only the start, i think. Stephen for the best part of a year, chinas trade sanctions have hit industry after industry. Doug smith this was massive. This was the end of our export to china. Tony battaglene the markets actually dropped to zero. Brendon taylor were all in survival mode. Were doing the best we can. Thats all we can do. Stephen the dispute is about far more than trade. Scott waldron the trade barriers that china imposed on australia in 2020 are cases of economic coercion. Rory medcalf china is trying to coerce australia into supporting essentially chinas interests. Stephen theres a fierce debate about how to respond. Doug clarke were not going to lay down in a fetal position and get kicked to death. Jane golley i just do wonder how many times we might choose to poke the dragon before the dragon turns back and blows fire at us in a pretty painful way. Stephen tonight, on four corners, we investigate chinas trade sanctions against australia. Well meet the australian businesspeople hit hard by chinas bans and tariffs. And well explore whether beijing is using trade as a weapon in a campaign of political coercion. Female china has followed through on its threat to whack crippling tariffs on australian barley, a move that will further inflame tensions between the two nations. The 80 tariff will be in place for five years, a decision that could cost australian farmers hundreds of millions of dollars. Stephen the salt lake country of southern wa is a long way from canberra and a world away from beijing. But farmers here have found themselves on the front line of a trade war with china. Its a windswept landscape, and it may not look like a food bowl, but its rich terrain for grain. Doug smith in this particular area, the other lakes area of western australia, barley is one of their main cash crops. I mean, it probably accounts for 50 of the grain thats grown here in western australia. Stephen doug smith heads the Industry Association wa grains group. Until last year, he was riding a barley boom driven by surging chinese demand. At its peak, china was buying more than a billion dollars worth of australian barley a year. Doug smith we were sort of exporting somewhere around six million ton of barley to china; were talking australiawide here. I think west australia alone was exporting somewhere around three and a half million ton. So, you know, weve forsaken all the other markets basically because it was all we could do to produce enough to satisfy the chinese market. Stephen but the risk of banking on china hit home last may when it imposed a crippling 80 tariff on the industry. Doug smith all of a sudden, here it was. And this wasnt, you know, the 10 or 15 a ton that the industry thought mightve been imposed on us. This was massive. This was the end of our export to china. Stephen to make matters worse, the announcement of chinas decision came when the new seasons crops were already in the ground. Doug smith if they had have made the announcement of that level of tariff in, oh, lets say, february, it would have been quite easy for growers to say, well, look, were not going to grow as much barley. But to wait until after, for all intentional purposes, a lot of the australian barley crop was planted. Yeah, it was a strategic . I would think so. Stephen it was a bitter blow after exhaustive efforts to refute chinas allegations that australia was dumping barley, at below the cost of production, onto the chinese market. Doug smith the timelines that was put on the industry to respond were so short. It was incredible. And the detail that they were looking for. They were looking for basically financial detail back down to grower level. Stephen doug smiths home is a Meeting Point for growers caught up in the china tensions. Among them, his friends doug and debby clarke. They think chinas move is calculated. Doug clarke theyve worked out very well to target the industries that cause the least amount of problems in their country, so it doesnt shut down their woolen mills, so the wool keeps going; the iron ore. So, theyre strategically picking off australia, where it has the least impact on their economy. Stephen debby, how do you feel about this . Debby clarke well, it is a bit annoying. But you cant waste energy on being angry or annoyed when you cannot influence a foreign government. Doug clarke i mean, we cant do trade at any cost. I mean, we got to uphold, you know, our principles and the principles of the australian way. We dont want to lie down in a fetal position and get kicked to death. We need to stand up and fight back. Stephen australia is challenging chinas tariff at the World Trade Organization. Dan tehan it might take one or two years for us to resolve it, but the principle of it is incredibly important. We want to go to the umpire, and we want to get a decision from the umpire, whether the actions being taken are right or not. If we dont have organizations like the World Trade Organization for us to go to, then its basically the rule of the jungle. Stephen barley was the start of a slew of trade allegations and sanctions that followed a souring of relations between canberra and beijing. Female the foreign minister, marise payne, is refusing to be drawn on whether she trusts china over its handling of the coronavirus pandemic. Stephen australias call for a covid inquiry appeared to be a catalyst. Female a chinese analyst has described the foreign minister Marise Paynes calls for an independent inquiry into the origins of the coronavirus outbreak and the Global Response as deplorable. Stephen the reality is the tensions are deep and longer standing. Rory its a big mistake to think that this is simply because of the way the Australian Government responded to the pandemic, the way the Australian Government very bluntly called for an International Investigation into the origins of covid19. If it wasnt that, it would have been something else. Theres been an accumulation of friction points between australia and china, id say at least over the past five years, that go to fundamental differences of interests and of political values. Jane if you look at the downward trend in political relations, it actually goes back, i think, to a high point, of about 2014, and there are a number of actions on both sides, of both the chinese and Australian Government, that signal a pretty consistent downward trajectory, and theres not a lot of reason to think that thats going to turn around. Stephen china set out its grievances in a document leaked to the media last year. They included banning chinese telco huawei from building australias 5g network. Australias foreign interference laws. The call for an independent inquiry into covid19. Australias incessant wanton interference in chinas xinjiang, hong kong and taiwan affairs. And antagonistic media reports that were poisoning the atmosphere of bilateral relations. The reporter who was handed the document by an Embassy Official had no doubt about chinas agenda. Jonathan kearsley i was very clear in asking her, what does this mean in the context of the trade issues wed seen with beef, and wine and barley and the like . And she said. Its all linked. She looked at me, and she said, if you make china the enemy, china will be the enemy. Stephen on the same day, chinas powerful Foreign Ministry echoed key grievances in answer to a question about the trade dispute. Rory many of these points go to the independent policy choices of the Australian Government in a democratic system, including choices to do with legislation, with the funding of think tanks, with the freedom of the australian media, with diplomatic positions australia takes in the international system. So, its simply untenable for any Australian Government to concede on those points. And i fear that, in a way, the Chinese Government has painted itself into a corner. Stephen in the same month that china effectively banned australian barley, another rural export was hit. Female four australian abattoirs have been banned from selling red meat into china. One of the meatworks is in casino in northern nsw, while three are based in queensland. Patrick hutchinson when we found out it was all hands to the pump exceptionally quickly. I certainly was on the phone for basically 72 hours just because of the sheer shock of this coming in. It was without warning. Stephen casino is the heart of the Northern Rivers beef belt and home to the Northern Cooperative Meat company, one of the abattoirs suspended by china. It was target for alleged labelling errors on some cartons of beef. Scott in the past, those sort of problems have been either ignored by china, or theyve been dealt with on a informal basis, industry to industry, people to people. But in the current environment, chinas become particularly formal about it, with very low tolerances. So that is their pretext to stop that trade stephen 10 of the casino meatworks business was lost with the china suspension. What do you reckon about this situation with china . Simon stahl oh look, im really focused on doing what ive got to do, in relation to china, and that is ive got to make sure my product leaves here thats acceptable to markets all over the world, and that includes china. I dont really listen to any of the outside noise because i cant control it. Stephen australian abattoirs were suspended for similar issues in 2017, but the matter was resolved in three months. This time, close to a year on, theres no resolution and no indication of when the suspensions might be lifted. Simon oh, look, hard to tell, but im comfortable were closer to getting back in than we were yesterday. Stephen it doesnt help that chinese officials wont pick up the phone. Patrick it is exceptionally frustrating. And thats the concerning part for us as an industry because our dialogue is what makes us operate effectively well in trade. And if that dialogues not there, then its nigh on impossible to try and then fix some of these issues. Stephen when australias new trade minister, dan tehan, tried to engage his counterpart in china, he was also met with silence. Dan i wrote to him in the middle of january. It was a very extensive letter. It set out why it was so important for us to be able to have a ministerial dialogue. Stephen what signal do you read into the lack of reply . Dan im not quite sure. Im a little puzzled by it because i think the best thing that all countries can do is maintain dialogue. If youve got differences, the best thing you can do is, is engage and make sure you can work through them. So, my hope is that over time, thats where well get to. Stephen economist and china expert, Scott Waldron, grew up on the land, in beef country. His familys property, in the tweed valley of northern new south wales, sends its cattle to the coop at casino. Scott hey, cattle. Hey, cattle. Hey, cattle. Come, girls. Stephen Scott Waldron has also lived and researched extensively in china. Hes fluent in mandarin, and wellplaced to analyze chinas trade claims. Scott the trade barriers that china imposed on australia in 2020 are cases of economic coercion. And the intent is for china to change australian policy, including on issues of the south china sea, hong kong, xinjiang, huawei, and foreign interference. Stephen on his reading, the trade sanctions flowed from demands by Chinas Communist Party for retaliation against any perceived threats or criticism of china. Scott xi jinping has instructed china to resolutely defend against any internal or external threat to the communist party, and so that socalled battle stance has become embedded within the party, within the ministry of foreign affairs, and its wolf warrior diplomacy, and down into economic units, including the ministry of commerce, the state administrations of customs and quarantine. So, if youre a midlevel official in one of those economic departments, your incentive, the way that you get ahead, is to appeal to that spirit. Jane economic coercion is a very deliberate activity to try and make the Australian Government change its policy stance. Its certainly not clear that thats what beijing has set out to do and nor is it clear that they have achieved that goal, but i think what we can say is that by the time youve got 14,15 sectors on the chopping block, whether you call it coercion or something else, it is quite clear that beijing is sending a signal and it looks very much like punishment to me. Stephen the Wine Industry was the next target. Female australias billiondollar wine exports to china are under threat. Is it economic coercion as relations languish . Stephen in august last year, china began an investigation of australian wine, claiming it was being dumped, at artificially low prices, on the chinese market. No region was more exposed than the Barossa Valley in south australia. Hamish seabrook we had inklings all the way along, probably for at least six months beforehand, that the chinese were going to introduce a tariff. We had fairly good intel. Stephen at hamish seabrooks family vineyard, the harvest is underway before dawn. Hamish ive been here more than 30 years, and i love the barossa. Its home. Stephen for years, his Main Business has been red kangaroo. Hamish started the venture with a Business Partner a decade ago, making wine for china. Hamish i think our First Container went in mightve been november 2011. We followed that up by a quick trip to china and met some more distributors over there. Its just grown from strength to strength from year to year. Stephen after china began its dumping investigation, the company decided to cooperate and open the books to its officials. Hamish weve got nothing to hide. We certainly had nothing to hide. Everything we do is transparent. We just figured, oh, well, if we submit and be part of this place where we can open up what we do, maybe the chinese will look favorably when they do introduce tariff. Stephen china imposed massive tariffs on the Wine Industry, up to 212 . Theyre in place for five years. Red kangaroo copped a slightly reduced rate, but more than enough to smash the business. So, your venture red kangaroo is effectively dead . Hamish its fair to say. This section back there, this is all the dry goods. Stephen this is the fallout from chinas trade war. Hamish so its a vast warehouse. You certainly get lost in here. Stephen pallets of wine meant for china, now gathering dust. Stephen how many bottles do you have stored here . Hamish weve got 60,000 bottles all burning a big old hole in our bank account at the moment. Stephen storing the wine has cost tens of thousands of dollars. Hamish whats worse, we had containers of wine on the water ready to land, and to be honest, we had no idea what was going to happen to those wines, whether they were going to be accepted or not. Stephen the wine spent nearly five months in customs being tested for additives the winemakers dont even use. Hamish whos to blame for this . I could honestly say that i feel that maybe the Australian Government could have done more to open up dialogue earlier. I feel that the Chinese Government could have done more to accept dialogue earlier, i feel that were just really a pawn in their political game. Stephen historic chateau tanunda looks out over the fields where the first barossa vines were planted in the 1840s. In happier times, the chateaus wines were enjoyed at the highest level. John geber this was at the g20 summit in brisbane in 2014, where our 100yearold semillon was chosen as one of the showcase wines of australia. Stephen so you had the president of america and the president of china drinking your wine. John and the president of chateau tanunda as well. Stephen despite submitting to a forensic investigation by chinese officials, chateau tanunda received a prohibitive tariff, and the timing, in the lead up to the Chinese New Year sales, maximized the pain. John so this is the year of the ox for 2021. Unfortunately for us, of course, we came into all these tariffs, and everything was sort of closed down. Its a long game. Our Wine Industry is not a marathon. Its not even a double marathon, its a triple marathon, and youve just got to keep going. Stephen china accounted for 40 of australias wine exports. Tony its been a devastating impact. So once the tariffs were introduced, we found that the markets actually dropped to zero. Weve got to find a new home for 1. 1 billion worth of wine. Stephen theres been significant Chinese Investment in the australian Wine Industry, especially in the barossa. And one of the ironies of chinas effective ban is that its hitting chinese nationals, chinese expats and chinese investors pretty hard. Last year, 768,000 bottles of wine from chineseowned vineyards in this region were shipped offshore to china. This year thats fallen to next to nothing. The grapevines of orchid wines are nestled on the slopes above the valley. Jason zhao so we have roughly about eight ton of the shiraz well be harvesting from the vineyard this year and about four ton of the cabernet, which was being harvested on the back of the house. Stephen jason zhao came to australia to study wine in 2005. He worked for two wineries before starting his own business. Nearly all his wine was going to china before the tariff cut it dead. Jason our business dropped for 95 . Stephen ninetyfive . Jason ninetyfive . Because we only have another five for selling the bulk wine to uk market and the us market, which is not be helping us for keep doing the business. Stephen jasons parents migrated to australia to join their son and his family. Jason my parents, they still encourage me. And they say, if you work hard, you do right things, and one day, the things will come back. Just put your head down and work hard. Just keep working. Stephen Scott Waldron has read and analyzed chinas allegations against wine and other industries in the original mandarin. Scott the chinese case against the australian Wine Industry is even more spurious than it is for the case of barley. So in the case of wine, china is arguing that australia dumped wine into china at below normal price. The price of australian wine exported to china is higher than all other countries, than france, or chile, or spain, and its many times higher than the price of chinese domestic wine. Stephen as the Wine Industry dealt with the tariff, sanctions had already moved from farming to mining. Female relations with china and the australian economy along the way may have suffered another hammer blow with unconfirmed reports that beijing has suspended lucrative imports of australian coal. Stephen in october, australian producers were told that coal yet to clear customs would not be allowed into china. By then, there was already a queue of vessels blocked from unloading australian coal. Paddy crumlin theyre lined up there, and china, for their political reasons, are holding them to ransom to make a point to australia. They cant leave to crew change because theyd lose their spot in the waiting list and the insurance that protects them. Stephen at one stage, 77 ships were stranded off china, with crews effectively imprisoned on the boats. Gaurav singh we are physically and mentally exhausted. We are scared that because of this trade issue, this trade war, god knows when we are going to reach home. Paddy its an extraordinary tale of a lot of depression. Theyre away from their families of filipinos and indians. Developing countries hit hard by covid. I mean, it is layer on layer on layer of human tragedy. Female australias lucrative lobster exports could be the next target in the growing trade spat with china. Tons of them are sitting at airports across china. The federal government understands they are being inspected for traces of minerals and metals. Stephen at margate, south of hobart in tasmania, the crew of the bold contender are readying the lobster trawler for one more voyage, its last for a while. No industry has suffered more from the china trade sanctions than this one. Brendon were just heading into bull bay, back of bruny island, to check our lobster pots this morning. Stephen how many you got there . Brendon we got 50. Stephen Brendon Taylor has made the journey countless times. Brendon twentyseven years, ive been involved in the rock lobster industry in tasmania. I was a deckhand for a very long time, and ive been running our Family Business with the bold contender for 13 years, and this is the toughest time ive ever seen. Stephen until six months ago, the lobster caught here would have been going to china
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