Australia and Taiwan in sensitive trade talks as China slams the door
Australian officials have been talking with Taiwan about boosting trade between the two economies as the Morrison government looks for alternative markets for billions of dollars worth of exports hit by China’s trade strikes.
Officials from the Department of Foreign and Affairs and Trade have held meetings with counterparts in the Taiwan government in recent weeks to discuss more trade opportunities.
While the Australian government has at this stage ruled out striking a free trade agreement with Taiwan, the two countries are discussing options to boost exports into the self-governed democracy of 23 million people.
Any move to enter a formal economic agreement with Taiwan could further inflame tensions with China, which has claimed sovereignty over the island state since the end of the Chinese civil war in 1949.
Former resources minister Matt Canavan said Australia should be planning a free trade deal with Taiwan.
"I think it would make absolute sense to finalise a trade agreement with Taiwan. It is a close friend of our country and a very important trading partner," Senator Canavan said.
"We have a strong presence in the commodity markets with Taiwan including coal and iron and ore. But we could no doubt increase trade of branded products and services including beef, beer and tourism."
Asked whether there was any risk of further angering Beijing by striking a free trade agreement with Taiwan, Senator Canavan said Australia "should not allow another country to dictate who we should finalise agreements with".
Senator Canavan's call for a Taiwan trade deal is the second within Coalition in three months after Liberal MP Ted O'Brien said in September that Australia should negotiate an agreement.
“If we’re serious about diversifying our economy, how can we not pursue deeper economic relations with Taiwan?" Mr O'Brien told The Australian Financial Review.
China has suspended the importation of more Australian beef, the latest setback in our free trade relationship.
China dominates Australian trade accounting for more than 30 per cent or $153 billion in exports annually. But Taiwan is Australia's sixth largest export market and surged by 20 per cent in 2018-19 to $10 billion, largely on the back of coal, iron ore, natural gas and copper exports.
While resources growth has been strong, consumables have historically been undermined by tariffs that make them less competitive against countries that have economic co-operation deals with Taiwan, including New Zealand and Singapore.
New Zealand, a competitor to Australia in the beef and wine sectors saw its exports to Taiwan rise by 22 per cent in the year after the deal was signed.
Australia walked away from plans for a free trade agreement with Taiwan in 2018 after China warned any deal would hurt relations between Beijing and Canberra.
Taiwan was on a list of economies the Coalition government was considering for bilateral trade deals but in a series of meetings over 2017 and 2018, Chinese Foreign Minister Wang Yi conveyed directly to then-foreign minister Julie Bishop that China was opposed to Australia boosting formal ties with the government of President Tsai Ing-wen.
Sources from both governments, who spoke on the condition of anonymity because of the sensitivity of the discussions, confirmed that talks have been taking place, but insisted they were standard meetings as part of the Asia-Pacific Economic Cooperation forum.
Because APEC is branded as a "meeting of economies", it provides the opportunity for Australia and Taiwan to talk about trading opportunities without recognising Taiwan as a country.
China's Ministry of Foreign Affairs warned Australia in November against taking a stand on Taiwan, accusing it of interfering China’s internal affairs, despite the Morrison government remaining publicly restrained on the issue.
Labor senator Kimberley Kitching said Australia had for a long time been "too reliant on one country as a destination for our exports".
"Labor has been calling on the government to diversify our trade portfolio and identify new markets and opportunities for Australian exporters," she said.
"As part of this, of course we should be looking to Taiwan, and ways we can increase the two-way trade between our countries."