Beef makes the cut as Australia, China move to boost trade

Australia keen to boost beef exports in wake of China ban on Brazilian imports

Australian countryside near Bendigo, northwest of Melbourne. (CIA.gov)

Sydney | Reuters — Australia and China are expected to sign new bilateral agreements on beef exports, energy and security during a four-day visit by Chinese Premier Li Keqiang that began on Thursday.

Li, the first sitting Chinese premier to visit Australia in 11 years, was welcomed to parliament in Canberra by Prime Minister Malcolm Turnbull amid extra security in the capital in the wake of an attack outside Britain’s parliament by a suspected Islamist-inspired attacker.

Australia is seeking to take advantage of China’s decision earlier this week to suspend meat imports from Brazil, the world’s biggest exporter of beef and poultry, due to a scandal over sales of rotten and salmonella-tainted meats.

Australia, however, may have little scope to increase meat exports as its cattle herd is languishing near a two-decade low. Graziers culled cattle in record numbers following a drought induced by an unusually strong El Nino weather system between 2014 and 2016.

Beef is among Australian agriculture exports to China that were worth more than A$8 billon (C$8.15 billion) last year. They have been propelled by the wide-ranging China-Australia Free Trade Agreement signed in 2015, cementing China’s position as Australia’s largest trading partner.

“China must feed their nation but has seven per cent of arable land. Australia is seizing the opportunity to provide the high-quality, safe food,” Turnbull said in a speech in Canberra.

During his visit, Li will meet Australian business leaders at trade forums and attend an Australian Rules Football League match in Sydney before heading to New Zealand for two days.

Trade agreements

Turnbull said he will also seek to progress a possible regional trade agreement as Australia seeks to minimize the impact of President Donald Trump pulling the U.S. out of the Trans-Pacific Partnership in January, effectively killing the accord in its current form.

While Trump has advocated an “America First” approach, China has signalled its desire to play a bigger international role, particularly in promoting free trade, a stance reinforced by Li.

“We believe that to resolve trade imbalances we need to continue to expand trade. That is the solution. We cannot close our doors,” Li said in Canberra.

China’s Foreign Ministry later cited Li as telling Turnbull that China will continue to open up and work with Australia to send “positive signals” about promoting trade liberalisation and protecting the current global trading system.

Li is expected to encourage Australia to sign up for China’s New Silk Road initiative but an agreement is unlikely during his visit, Reuters reported earlier this week.

The plan, officially called the One Belt, One Road, or OBOR, initiative, is a signature foreign and economic policy of Chinese President Xi Jinping, envisioning massive infrastructure spending to link China to Asia and beyond.

Regional security will also be discussed as Australia, which has supported U.S.-led freedom of navigation activities in the region, seeks to reduce tensions in the South China Sea.

China claims almost the entire South China Sea, through which about $5 trillion worth of trade passes each year. Brunei, Malaysia, the Philippines, Taiwan and Vietnam also have claims to parts of the sea.

— Colin Packham is a Reuters commodities correspondent based in Sydney, Asutralia. Additional reporting for Reuters by Ben Blanchard in Beijing.

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