Australia calls for G7 support of WTO reforms to counter China

Australia has called on G7 nations to support reform of the World Trade Organization, arguing it was the best way to blunt Beijing’s campaign of economic coercion against Canberra and to counter Chinese competition in the Indo-Pacific region.

Scott Morrison also supported President Joe Biden’s intelligence review into the origins of Covid-19 and warned that democracies had to co-operate more closely than they had at any time since the Cold War because of the growing risk of conflict with China.

“Accelerating trends are working against our interests,” Morrison said in a speech ahead of the G7 summit in the UK this weekend. “The Indo-Pacific region — Australia’s region — is the epicentre of renewed strategic competition. The risks of miscalculation and conflict are growing.”

Canberra wants G7 nations to agree WTO reforms that will enable the appeals body at the heart of its decision-making process to resume work. Washington has blocked appointments to the appellate body since Donald Trump was elected president over concerns about judicial over-reach, a move that has effectively enabled nations to avoid compliance with WTO ruling.

The paralysis of the WTO dispute settlement regime comes at a difficult time for Australia, which has referred China to the WTO over its imposition of punitive tariffs on barley. It is preparing to do the same over tariffs on wine.

“The most practical way to address economic coercion is the restoration of the global trading body’s binding dispute settlement system. Where there are no consequences for coercive behaviour, there is little incentive for restraint,” said Morrison.

He said like-minded countries should draw inspiration from the years immediately following the second world war and work together to maintain an open, rules-based system that enables liberal democracies to flourish.

Australia and China are embroiled in a bitter diplomatic dispute over the former’s call for an inquiry into the origins of Covid-19 last year. That prompted Beijing to impose tariffs and other restrictions on billions of dollars of Australian imports in what analysts labelled a campaign of economic coercion.

Morrison was invited to the G7 by Boris Johnson, UK prime minister, along with the leaders of India, South Africa and South Korea, in a move analysts said demonstrated support for Australia in its dispute with China.

“G7 leaders know that if they don’t work collectively on the China challenge, they will all be coerced separately by Xi’s China and they’ll fail to curb Beijing’s increasingly aggressive international conduct — on trade, territory, security, technology and key values like human rights,” said Michael Shoebridge, analyst at the Australian Strategic Policy Institute.

The conservative Australian government’s tough message on China followed criticism from the opposition Labor party, which last week accused it of using rhetoric that “inflamed nationalist sentiment” for domestic political purposes. Business has also expressed concern at the growing tensions with China, Australia’s largest trading partner.

“Australia needs more strategy and less politics when it comes to managing our differences with China,” said Anthony Albanese, Labor leader. “But foreign policy is not a game. It’s not a photo op. It’s a serious business with profound security and economic implications.”

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