Experts Caution Australia on Linking China, Taiwan Trade Pact to Other Issues

SYDNEY — Although Australia seems likely to back Taiwan’s, rather than China’s bid, to join a major pan-Pacific trade bloc, Canberra must focus solely on their qualifications rather than link its decision to other issues, analysts say.China and Taiwan …

SYDNEY — Although Australia seems likely to back Taiwan’s, rather than China’s bid, to join a major pan-Pacific trade bloc, Canberra must focus solely on their qualifications rather than link its decision to other issues, analysts say.

China and Taiwan are both lobbying for Australia’s backing of their inclusion in the 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership, one of the largest free-trade areas in the world, which was signed in 2018.

Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam currently make up the CPTPP.

China’s courting of Australia’s support comes despite Beijing’s blocking of agricultural goods that have cost Australian exporters billions of dollars. It also coincides with a period of severely strained relations because of the new AUKUS security pact among Australia, the United States and Britain, which has infuriated Beijing.

Any temptation to bargain with China to lift punitive sanctions against Australian wine, barley and lobster exports in exchange for championing its entry into the CPTPP risks rewarding Beijing’s trade coercion, according to an expert.

“Outright favoring China over Taiwan may help regain some favor in Beijing in the short run, but at what cost? Australia will only lose in the long run by horse-trading support for China in return for some loosening of the trade blockages imposed by Beijing,” Hugh Piper, a former strategic policy adviser in Australia’s Foreign Affairs and Trade Department, told VOA.

“It sends an awful message to Beijing that it can extract concessions from Australia simply by restraining trade,” Piper said.

Publicly endorsing Taiwan’s campaign for admission to the CPTPP could also backfire, he said.

“Australia should be cautiously supportive of Taiwan's bid, but certainly no more enthusiastic than for any other prospective member,” Piper said.

“Australia would lose whatever moral and rhetorical high ground it retains in its ongoing trade dispute with China if it was seen to be using the CPTPP as a vehicle for political retaliation,” he said.

Taiwan is a significant regional economy and would be seen as a welcome addition to the cross-Pacific bloc, especially by Australia, which does not have a bilateral free trade agreement with the island, he said.

Despite the absence of a bilateral Australia-Taiwan trade agreement, Taiwan is already a strong market for Australian exports. Taiwan was Australia's 12th largest trading partner in 2020, worth $11.9 billion, and it was Australia’s ninth largest merchandise export market in 2020, worth $7.3 billion, according to Australia's Department of Foreign Affairs and Trade. Major exports were coal, iron ore, natural gas, aluminum and copper.

“There's certainly no need for Australia to dial up the rhetoric on Taiwan's bid, publicly anyway. Australia's focus should be on working intensely behind the scenes to convince other current members to look favorably on Taiwan's bid, provided they can demonstrate that they meet the entry requirements,” he said.

Jennifer Hsu, a foreign policy research fellow at the Lowy Institute think tank, said Canberra has already indicated cautious support for Taiwan’s application.

“Trade Minister Dan Tehan has intimated that the Australian government and its representatives are seeking bilateral support [from other CPTPP member states] for Taiwan’s application to join the CPTPP,” Hsu told VOA.

“So I think there is shifting perspectives, at least from the Australian government’s side, to see Taiwan as one of critical importance to the region and also to advancing Australia’s exports interests.”

While expanded tariff-free trade with Taiwan would not offset the losses from Chinese trade sanctions, it would open access to Taiwan’s technology products and provide new markets for Australia’s barley, lobster and wine.

Such a move chimes with Treasurer Josh Frydenberg’s public plug to Australian exporters to diversify and lessen their reliance on Chinese markets, saying in a public address, "It is no secret that China has recently sought to target Australia's economy."

Supporting Taiwan’s admission into the trading bloc “is one demonstration of this process and this thinking,” Hsu said.

The bloc imposes entry requirements that include a commitment to workers’ rights, freedom of association, and a ban on forced labor.

Few believe that China would sign up to those commitments.

China's bid is “likely to come unstuck at the point of substantive commitments to market reforms that CPTPP membership demands,” Piper said.

“Given [China’s] ongoing prioritization of state control over market liberalization under [President] Xi Jinping, the kind of reform required for the sake of a trade agreement seems unlikely to be prioritized over the desire for control over the economy.

“That leads to the implication that China's bid is more about strategy than economics: a move to further stymie Taiwan's international space and voice.”

China will need to pull back on any reprisal language or behavior aimed at Australia while it seeks to join the pact, Hsu said.

“The Chinese government will articulate stronger and angrier words against Australia’s support for Taiwan’s application, but the Chinese government has to balance that with what it seeks from joining the trading bloc,” she said.

“How much more can China say about Australia without harming its application to join the trading bloc? That’s the framework one has to think about: how far will China push its language and economic coercion before it backfires?” she said.

Source: Voice of America