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Trade – China


Rosalie Woodruff MP

Rosalie Woodruff MP  -  Tuesday, 24 November 2020

Tags: China, Trade, Chinese Communist Party

Dr WOODRUFF - Minister, in your opening statement you said that Tasmania might have what the world wants. We agree, but we do not behave in the way that China wants us to behave, and everyone in Australia is aware that that country is apparently intent on making an example of us in global markets. At the Australian level we have had a successive number of markets closed off for a number of spurious reasons including barley, wheat, timber, food, wine, copper and live lobsters left in port. What Tasmanian markets have already been affected by the barriers that China is putting up to trading?

Mr ROCKLIFF - If we go back to the commencement of the pandemic the first industry hit was the rock lobster industry back in January/early February, and those concerns are still ongoing with that matter. As you can appreciate, it is a very complex relationship we have with China and the Australian Government's jurisdiction in matters of foreign policy and diplomacy. As a government at a Tasmanian level, given we are an exporting state, there has been a lot of engagement with China with a lot of our exporters. It is one of the reasons we also have to look very closely at diversification opportunities as well.

I stand to be corrected but I think China makes up around 41 per cent of our exports in Tasmania and our next biggest trading partner is Japan at around 7.3 per cent. When it comes to diversification and managing those export risks it is increasingly important, but a lot of our exporters value the relationship with China and there are a lot of valuable relationships on the ground between our exporters here and the people they export to on the ground in China.

We are working to have people on the ground in Japan, Singapore and the United States, which is a very welcome move and will assist Tasmania in that market diversification. There has been a lot of national coverage around the impacts of beef and wine, for example, and my understanding is that the wine industry has not been largely affected -

Dr WOODRUFF - In Tasmania because we absorbed into the mainland?

Mr ROCKLIFF - There may well be an impact as such. I would not say we are immune by any stretch of the imagination and it is a concern, but it is important. China is a key market for Tasmanian wine producers. USA, the UK, Japan, Singapore and Hong Kong are the priority markets for the Tasmanian wine industry, pertaining to your question what markets have been affected.

Dr WOODRUFF - Minister, do you consider that 41 per cent of Tasmania's export trade is potentially under threat if China continues with its trajectory of knocking off different import markets one by one? It may be, some analysts think, a strategy that they continue to pursue. There is as yet no indication that things have changed.

What steps are you taking to look at the exposure impacts on those markets here in Tasmania? We can come back to what you are doing overseas, but in Tasmania finding other opportunities.

Mr ROCKLIFF - You mean domestic market within Tasmania?

Dr WOODRUFF - What opportunities are you looking at for that 41 per cent? If that happened, and let's hope that never happens, what's your planning for the worst-case scenario?

Mr ROCKLIFF - I'm advised, that most trade value chains have not been impacted by COVID-19. They continue to function. Current bilateral trade challenges in beef, barley, seafood and wine are very technical in nature. Australia and China are working through these on merit, consistent with their respective legal obligations. I've mentioned that these are a matter for the Australian Government. Tasmania will engage in good faith on these issues with the Australian Government if called upon to do so.

We haven't had considerable engagement with Senator Birmingham's office, my office and Senator Birmingham's office. I've discussed a number of matters with Senator Birmingham directly, inside and outside of China. Rock lobsters is one of those issues. Our potato import issue we had earlier in the year is another example of that. China has announced suspensions of log exports from Victoria and Queensland citing quarantine concerns. While Tasmania is not directly impacted the announcements have caused that uncertainty. Some whole-log shipments have been postponed or cancelled due to that uncertainty. The overarching trade strategy has always been based on the core philosophy of market expansion, diversification and managing those export risks. That’s what we intend to continue to do.

Our trade strategy of 2019-25, as I have mentioned, has key focuses on USA, Japan, Malaysia, Singapore and China as our five key countries for engagement. These are countries identified for broad engagement as they fit across a broad number of key sectors such as agribusiness, education, resources, energy, tourism and advanced manufacturing. We've been through the Interim Trade Action Plan and the 41 actions and we have updated that in terms of where we're at - done, commenced or ongoing. Three new in-market Tasmanian trade advocates have been established to complement the ongoing work of Vivian Zhao, Tasmania's business development manager in mainland China, and these trade advocates will be based in the United States of America, Singapore and Japan. The plan also includes market intelligence activity for exporters on new opportunities across Asia, USA, New Zealand and developing a domestic market engagement program and creating an Asian market engagement plan.

Dr WOODRUFF - Does that include Taiwan?

CHAIR - I will go to Ms White before I go to you, Mr Tucker.

 

Dr WOODRUFF - Minister, you mentioned before that whole log exports from some mainland states have been knocked back by China recently. We know that minister Barnett was part of an Office of the Coordinator-General trade delegation to China in December last year in his continued efforts to sell off Tasmania's native forests. Can you tell me how much that trip cost and was any contract signed for whole log or other native forest wood export, or is there one in the process of being negotiated?

Mr ROCKLIFF - Mr Barnett did attend that, as you say. I will see if I can sift through some information for you. Two trade missions to Europe and China were undertaken in 2019 20 and one mission to North America in March 2020 was postponed due to COVID 19 travel restrictions and I was scheduled to go on that mission in late March and April. I am a very strong supporter of trade missions and engagement. It is important to establish those relationships. I know people have various views about trade missions but I am a very strong supporter of them, irrespective of who is in government because we have to do all we can to sell Tasmania and its wonderful produce and goods.

In December 2019, the minister for Primary Industries, Energy and Resources, Mr Barnett, led a delegation to China. This visit was critical in supporting Tasmania's trade opportunities in wool, traditional Chinese medicines, seafood, minerals, forestry and timber and energy. As a result of this visit an investor has announced a willingness to invest $1 million towards research into the growth and optimisation of herb production in Tasmania. Did you ask about the cost of the mission?

Dr WOODRUFF - I asked about the cost of the mission and whether any contracts were signed or in the process of being negotiated in relation to wood products.

Mr ROCKLIFF - I am advised that the total cost of the China trade and investment mission in December 2019 was $85 318.23.

Dr WOODRUFF - Was a contract signed in relation to forest wood product, or is one being negotiated?

Mr ROCKLIFF - Not that I am aware.

Ms WHITE - It doesn't sound like anything came from it.

Dr WOODRUFF - No, $1 million of herbs.

Mr ROCKLIFF - I am trying to find some information pertaining to your question. China is a key importer of Tasmanian forest products and last year Tasmania exported around $30 million to $40 million of softwood logs, around $30 million of hardwood logs and over $200 million of woodchips.

Dr WOODRUFF - Native plantation woodchips or native forest woodchips?

Mr RUTHERFORD - I do not think we disaggregated them for this purpose.

Dr WOODRUFF - It could be either?

Mr RUTHERFORD - It will be mainly hardwood but we can check that; I don't have that data with me.

Dr WOODRUFF - Could we get that data, minister, if you have it?

Mr RUTHERFORD - If we collect it, because it is very important to know that a lot of this material is aggregated nationally before it goes to China, so we have to often estimate.

Dr WOODRUFF - By 'material' you mean the product.

Mr RUTHERFORD - Yes, the product is aggregated from several sources and that is essentially the whole log story too, but the aggregators have ceased to take it during this period of uncertainty from Victoria so our whole logs aren't being aggregated with theirs. They are being held because they would normally be aggregated with a mixture of logs from other states to make the specs and at the moment because of the uncertainty, shippers are delaying sending because of what may happen with -

Dr WOODRUFF - Because of the China trade uncertainty, not COVID but China trade uncertainty?

Mr RUTHERFORD - Yes.

Dr WOODRUFF - Some have already been held back. The Victorian market, I think you said, and New South Wales they've been rejected?

Mr RUTHERFORD - Yes, so there are no questions over hours. We're just caught in the aggregation process that nationally fills the ships that go to China.

Dr WOODRUFF - But our whole logs are still leaving Tasmania, they're sitting on the mainland and they're not being exported or they're not even leaving Tasmania?

Mr RUTHERFORD - It's mixed. There isn't a simple answer to that because it's happening through individual merchant aggregators on the mainland.

 

Dr WOODRUFF - Minister, do you think our trade relationship with a given country is something that we should consider when we're setting our internal domestic policies in areas that are not related to trade?

Mr ROCKLIFF - Just run that by me again, sorry.

Dr WOODRUFF - Do you think the setting of our domestic Tasmanian policies; our decisions are unrelated to trade should be moderated or influenced in any way by our thoughts about our trading partners and their views on the position we might take?

Mr ROCKLIFF - If I can answer that more broadly, we have long-standing relationships across the globe with various exporters in Tasmania and various products and services and education provision as well. My objective as minister for Trade is to ensure that we maintain and/or increase those opportunities for our trade. If you would like to give me an example of what you're really referring to -

Dr WOODRUFF - Yes, sure.

Mr ROCKLIFF - I could perhaps be more succinct in that, but I'm not going to - we value all our trading partners.

Dr WOODRUFF - I'll be specific. I'm not trying to trap you but there are a number of examples. Last year both the Labor Party and your Government did not support a Greens' motion to ban the impersonation of police vehicles from any other jurisdiction. There was a fake police vehicle that people in Tasmania were concerned about masquerading as Tasmanian police. The position presented by you as to cite the importance of our trade relations with China -

CHAIR - Dr Woodruff, everything is on a pretty even keel and I'm happy to keep it that way, but you need the questions to be vaguely related to the Trade portfolio.

Dr WOODRUFF - This is heavily related to the Trade portfolio, thank you.

CHAIR - I'm not quite sure how a Greens' motion on banning certain vehicles quite relates to -

Dr WOODRUFF - I'm just about to finish my question, and I take your point. My point, minister, is do you think we should be moderating our domestic policies and decisions, for example making strong statements about human rights violations of a country, so that we maintain an eye to trade in the market? I am talking here particularly about China but there are other countries that may be in that frame from time to time.

Mr ROCKLIFF - Dr Woodruff, I understand where you are coming from here. Our relationship with China is a very complex one. It is led largely by the Australian Government. Of course, we can play a role in that, and I have mentioned China but your question refers to other areas across the globe as well. We have a very proud history of human rights - well, more recent history around human rights in terms of Tasmania as it stands now; I wouldn't say that when it comes to our First People by any stretch of the imagination but our more recent history - but our Trade Strategy recognises the very complex trading environment and prioritises the need to adapt and be proactive to responding to challenges and opportunities potentially.

Our Government's overarching Trade Strategy has always been based on a core philosophy of market expansion, which is what I have been referring to, diversification and also managing those export risks. Your focus is on China and has been for a while. It is one of our key trading partners and it is important we continue to have as much as possible a cooperative and engaging relationship with China, and that will continue. It is a large chunk of our exports and value to our Tasmanian economy.

Dr WOODRUFF - This is on another matter related to earlier. Is it your view that the international market trade for our Tasmanian forest products is compromised by the fact that we do not have Forest Stewardship Council certification for our native forest product? Do you accept that that compromises our export market trade opportunities?

CHAIR - It is a relatively tenuous link again, I have to say, Dr Woodruff.

Dr WOODRUFF - Well, it is about trade - forest trade.

Mr ROCKLIFF - Mr Barnett is Minister for Resources so you are rolling into an engagement and discussion with Mr Barnett

Dr WOODRUFF - It is a question about certification which is very much a trade issue, isn't it?

CHAIR - Certification is a forestry resources issue.

Dr WOODRUFF - It is a market issue in terms of how the markets perceive us. How are we getting traction on the international market?

Mr ROCKLIFF - When it comes to certification I do not want to cut across minister Barnett's portfolio responsibilities. I am sure he is willing to answer questions with respect to this matter when he appears before the committee.