Farmers warned subsidies would enrage China

Trade Minister Simon Birmingham has warned farmers against pushing for a subsidy security blanket in the face of trade tensions with China.

Senator Birmingham told an Agribusiness Australia forum on Monday that China’s recent trade sanctions had increased the risk of doing business and were a threat to the regional economic recovery from the coronavirus pandemic.

Asked if the Morrison government should look again at subsidies to help the sector, he said that would only expose farmers to more problems with China.

Agribusiness Australia chairman and Elders Limited managing director Mark Allison, who hosted the forum, also poured cold water on the idea of subsidies to boost the farm sector.

“Agribusiness Australia doesn’t think subsidies are the answer,” he said.

“The answers are in investment in physical and digital infrastructure and in driving innovation.”

Mr Allison warned in April that Australia should not needlessly rile major trading partner China with its push for an international inquiry into the COVID-19 pandemic.

China has since imposed trade crippling tariffs on barley and sanctions on winemakers and meat processors.

Mr Allison said it was encouraging to hear Senator Birmingham affirm Australia’s commitment to a relationship based on mutual respect.

Senator Birmingham said Australia would not take a backward step in protecting its security and interests, while welcoming China’s economic growth.

“Ours is not a policy of economic containment,” he said.

He said the government continued to support the grains industry in talks with Chinese authorities on the barley dispute, while at the same time preparing a strong case against China to take to the World Trade Organisation.

China slapped an 80.5 per cent tariff on Australian barley imports in May.

Australian exporters were accused of dumping barley into the Chinese market and Beijing claimed farmers here were propped up by taxpayer-funded handouts in the form of drought relief measures, R&D incentives and other government support packages.

China also claims that Australian winemakers are subsidised.

The Morrison government and industry leaders in barley and winemaking have rejected the claims.

Senator Birmingham said any boost in subsidies would likely expose farmers to similar countervailing duties allegations.

He said Australia was looking for a speedy resolution on free trade agreement talks with Britain and the European Union, and would continue virtual negotiations this month.

Senator Birmingham said he was confident of having the UK deal done before the end of year, but was not interested in achieving a quick resolution by giving ground and getting an inferior result.