US - SINO DILEMMA OVER MORRISON’S HEAD ?

Australia like many other Asian countries is a middle power country having security arrangements with the United States but growing economic ties with China. Globally, Australia is connected to the rest of the world through migration, trade, foreign aid, and even sporting events. Australia is a multicultural country, its population is made up of people from all over the planet. This in itself makes Australia globally connected. Australia has long enjoyed friendly relations with both the major global superpowers (The United States and China), but the recent differences borne out of the Covid-19 virus outbreak, between the two superpowers, have left the Australian government in dilemma over what to do now. Australia's alliance with the United States means that Australia's relations with China are directly linked to the health of the US-Sino relationship.

Aus - US Relations

Over-time, Australia has always been viewed as a vital ally, partner, and trustworthiness of the United States. The United States and Australia maintain a robust relationship underpinned by common interests, shared democratic values and, cultural affinities. Economic, academic, and people-to-people ties are the essential aspects behind this strong bond. The US-Australia alliance is an anchor for peace and stability in the Indo-Pacific region and around the world. Both countries share a strong interest in maintaining freedom of navigation, overflight, and other lawful uses of the sea, including in the South China Sea.

Both US and Australia have shared strong economic relations since the past. The US-Australia Free Trade Agreement (FTA) came into force on January 1, 2005. The US-Australia FTA has boosted US goods exports to Australia by more than 80 percent since 2004 (pre-FTA). In 2019, total US goods and services trade with Australia posted a total of $65.9 billion with the United States running a trade surplus of $28.9 billion. US firms have operated in Australia for over 100 years and, as per the Australian government statistics, currently employ more than 300,000 Australian employees, many in high-paying sectors. US firms, on the other hand, are also the largest tax-payers to the government, wage payers to Australian employees, and a massive contributor to Australian GDP, of any other foreign country companies operating in Australia.

Today, US services exports are up by over 200 percent as compared to the pre-FTA scenario. Besides economical, social and, political bilateral relations have always been strong irrespective of the situation in the past but given the current scenario, the future of such relations lies within the corridors of uncertainty.

Aus - Sino Relations

The Sino-Australia relationship has traditionally been dominated by global geopolitical and strategic concerns, but since the 1980s the two countries have built up a variety of common bilateral and regional interests, including strong economic ties through trade and investments. Nevertheless, as a growing global superpower, China still views individual bilateral relations in the context of wider global issues. Australian economy depends massively on its trade relations with China. The stats released by the Australian Bureau of Statistics significantly reflect Australia’s increasing economic dependence over China in last few years.

China not only serves as a market for its commodities but also for its more complex goods and services. Besides being a market for completed goods, China also presents immense competition to foreign products thus forcing the exporters to improve the quality of their products to compete in a global market.

Australia is China's sixth-largest trading partner in the world, it is China's fifth-biggest supplier of imports and its tenth biggest customer for exports. 25 percent of Australia's manufactured imports come from China whereas 13 percent of its exports are thermal coal to China. The countries share a two-way investment relationship as well. According to a survey, 77 percent of Australians see China as an economic partner with only 15% seeing it as a military threat.

Australia-Sino relations have been quite vigorous in the past but the current scenario poses quite a few big questions which would decide the future of these bilateral relations.

Current Scenario

Globally, Australia has been appreciated for the occasions in the recent and more distant past when it has acted independently of the US, but China remains very sensitive to perceived changes in Australia's policies which indicate a return to policies of the past. Amid the Covid-19 outbreak, Australia has been one of the most vocal and early advocates of an independent investigation supported by 122 countries including countries of European Union, UK, Russia, Canada, the African Group and New-Zealand into the origins and early handling of the virus' outbreak, a stance that has attracted strong pushback from China, claiming it to be a political maneuver against Beijing.

After this incident, China didn't take long enough to retaliate and slapped 80 percent tariff on Australian barley exports. China is the largest export market for Australian barley, where it is used to make beer and feed livestock, so the hiked tariffs are likely to threaten a $500 million a year blow to the Australian economy. Although, Australian officials have tried to separate the economic issues from its call for an investigation into the Covid-19 outbreak in Wuhan. As much as Australians are willing to reduce their economic interdependence with China, the global economic downturn limits both the will and ability to drive such a difficult policy shift. With China edging back towards normal life faster than anybody else and still being the globe's largest consumer market, it is hard to believe that political leaders and consumers will be in a position to consciously avoid China's market.

At the time of Covid-19 virus outbreak, no Australian effort was made to work with the United States to build a coalition of like-minded nations to foster a uniform response, for example, smooth passage for trade between the two countries besides taking precautionary measures to contain the spread of the virus, to establish common and trusted protocols for testing of virus and to ensure that the international recovery might occur as swiftly as possible. For Australia, this represented a remarkable break with what had been an instinctive attitude to turn to Washington for support for joint initiatives or follow the US lead in international policymaking. Also, the United States became the largest source of imported coronavirus infections to Australia, yet the Morrison government resisted urging in early March to stop travelers from the United States despite signs of the seriousness of the outbreak.

This disconnect wasn’t just limited to health when the trump administration claimed that poor lab safety in Wuhan had potentially led to the initial outbreak, it received a sympathetic airing by a senior Australian minister, only for the Morrison government to soon ensure there was a firm distance between itself and Trump’s suggestions about the origin of the virus. Australia remained clung to its plea to hold an independent investigation to unveil the secret behind the origin and early handling of the outbreak by the Chinese government.

Recently, Australia has been hit by massive cyber attacks targeting its organizations across a range of sectors, including all levels of government, industry, political organizations, education, health, essential service providers and, operators of other critical infrastructure. Australian Prime Minister, Scott Morrison has described the cyberattack as a malicious and sophisticated state-based actor. Although, the PM in his official announcement didn't take any specific name, though, given the high-scale and timing of virus, it was easier than ever for the observers to guess that it’s none other than China.

Conclusion

Amid these difficult times, although the Morrison government has tried hard to distance itself from Trump’s repeated accusations of China being the mastermind behind the virus's outbreak, I believe none of this will ease Australia’s worsening relations with China. If anything, it has piled on the already overloaded pressure, illustrating how Australia must navigate the US-China rivalry while protecting its interests. It appears like China’s hypersensitivity about Covid-19 has made the prospects for cooperation between Canberra and Washington even more difficult than ever. At the moment, Australia is caught between its most strategically important treaty ally and its largest trading partner. Australia long has enjoyed a trade surplus with China, whereas the United States has not. The danger remains that the United States will judge Australia’s prosperity harshly, as-built solely from trade with China at the same time as Washington’s bipartisan consensus solidifies around the idea that China’s growth has come at least in part at the expense of US jobs and some US companies.

Thus, it could be easily inferred that the Sino-Australian and US-Australian relationships have soured in recent times owing to the differences between the two global superpowers. But as per the Australian perspective -

Can the United States still be considered a trusted ally?

Should the Morrison government join hands with China?

Will the cold war between the global superpowers destroy Aussie’s future?

Many important questions lie ahead of the Morisson’s government, answers to which, will decide Australia’s future in the globe. At the moment, these relations have soured but not destroyed.

By Puru Jain