Trade
Ramifications of Australia’s China travel ban
Author: Bryan Mercurio, CUHK
The novel coronavirus is spreading rapidly through China and remains a global threat to health. Over 75,000 people have contracted the virus and over 2000 have died. Models estimate hundreds of thousands of cases, with the actual number of fatalities likely also significantly higher.
Australia closed its borders on 1 February, denying entry to all travellers who had been in or transited through China within 14 days of arrival in Australia ‘to ensure the health, safety and well-being of the Australian community’. Australian citizens, permanent residents and their immediate family members are exempt from the ban but still subject to heightened security measures. Australia has not implemented any additional border and biosecurity restrictions on imported cargo as there is minimal risk of disease transmission via cargo.
The merits of imposing a travel ban are debatable. But there is no legal ground for China to challenge the ban under World Trade Organization (WTO) rules or the China–Australia Free Trade Agreement (ChAFTA). Still, its economic and political implications may be significant.
The international trade regime primarily applies to goods and services but does not guarantee the free movement of persons. The WTO does not prohibit Australia from banning foreign travellers. But the WTO would become relevant if Australia restricted entry of goods from China. Several air couriers and shipping vessels are avoiding Chinese ports in fear of being denied entry elsewhere. If the virus is not quickly contained, countries may start prohibiting Chinese imports.
A blanket ban on Chinese goods would be inconsistent with Article XI of the General Agreement on Tariffs and Trade (GATT). But it would likely be deemed a justifiable departure from the rules prohibiting import restraints under the general exceptions clause contained in Article XX of the GATT as a measure ‘necessary to protect human, animal or plant life or health’. Or it may be justified under Article XXI as a measure ‘necessary for the protection of essential security interests’ taken in time of an ‘emergency in international relations’.
The WTO’s Sanitary and Phytosanitary (SPS) Agreement would also be relevant as it covers food safety, plant and animal health. Article 2 of the SPS Agreement grants members ‘the right to take sanitary and phytosanitary measures necessary for the protection of human, animal or plant life or health’. Such measures must only be applied to the extent necessary to protect human, animal or plant life or health based on scientific principles and sufficient scientific evidence. But with limited scientific evidence on the coronavirus, it may be difficult to fit a ban within the scope of Article 2 of the SPS Agreement. Australia could possibly, however, prevail under Article 5(7) of the SPS Agreement, which is the embodiment of the precautionary principle.
The ChAFTA would likewise not prohibit Australia’s border measures as it contains many of the same obligations and exceptions as the WTO. While the ChAFTA contains a chapter on the ‘Movement of Natural Persons’ outlining procedural obligations of the parties related to immigration formalities, there is nothing that guarantees immigration clearance. Article 10.1(3) makes clear that ‘nothing in this Agreement shall prevent a Party from applying measures to regulate the entry or temporary stay of natural persons of the other Party in its territory, including measures necessary to protect the integrity of its territory and to ensure the orderly movement of natural persons across its borders’.
There is little that China can do legally to force Australia to reconsider its policy and remove the travel ban. But China is unhappy with the measures and may take retaliatory action.
Trade with China will also be affected. With no incoming flights, goods normally transported in the cargo hold will not enter Australia. There may also be issues with sea transport as ships departing China on or after 1 February will not be allowed to enter port until 14 days have elapsed. Australian importers may experience issues and products may be delayed in reaching shelves. The lockdown of industrial China is also causing interruptions as factories are yet to resume full production following the Lunar New Year.
The larger economic impact may be felt in the services industry. China is the largest source of foreign visitors to Australia, with over 1.4 million arriving each year, spending over while in the country. The retail, hotel, and food and…
Trade
Self-Reliance and Openness: Core Principles of China’s Third Plenary Session
The Third Plenum communique from the CCP indicates a prioritization of stability and compromise in response to China’s economic challenges. It highlights the concept of Chinese-style modernization and establishes political guidelines for balancing regulation and market forces.
The CCP’s Third Plenum communique signals a focus on stability and compromise in the face of China’s economic challenges. It emphasises Chinese-style modernisation and sets political directions for balancing regulation and market forces. While not as groundbreaking as previous plenums, it acknowledges the importance of market mechanisms and technological self-reliance, aiming to address issues like high youth unemployment and private sector uncertainty. The communique seeks to navigate the complexities of global competition and domestic innovation, potentially reshaping global supply chains and trade dynamics. Overall, it presents a pragmatic blueprint for China’s economic future.
Source : Self-reliance and openness central pillars of China’s Third Plenum | East Asia Forum
Trade
Trade Prevails Over Political Persuasions in China-Germany Relations
China and Germany maintain a strong bilateral relationship, rooted in economic cooperation despite ideological differences. Recent visits and agreements focus on expanding trade and addressing mutual concerns, navigating challenges while nurturing ties.
Evolving Bilateral Ties
China and Germany share a strong bilateral relationship, rooted in history since 1972. This connection has seen moments of cooperation intertwined with periods of tension. German Chancellor Olaf Scholz’s April 2024 visit underscores Germany’s commitment to fostering this partnership, reflecting a mutual interest in maintaining economic ties despite ideological differences.
Economic Pragmatism
As the second and third largest global economies, China and Germany’s economic interdependence is crucial. Germany emerged as China’s primary trading partner in 2023, with trade values reaching €254.4 billion (US$280 billion). In response to global scrutiny, Germany has taken a balanced approach, emphasizing economic stability over political discord. This was evident during Scholz’s prior visit in November 2022, where his diplomatic tone contrasted with broader EU sentiments.
Facing Challenges Together
Despite increasing public skepticism in Germany regarding China’s global influence and human rights issues, both nations continue to seek common ground. Their October 2023 Joint Statement highlights intentions to pursue cooperation in areas like carbon neutrality and open markets. To navigate these complex terrains, Germany can utilize its institutional frameworks to enhance dialogue, while also considering supply chain diversification to reduce dependency on China. The intertwining nature of their economies suggests that, despite challenges, both countries will continue to prioritize their substantial trade relations.
Source : Trade trumps political persuasions in China–Germany relations
Trade
Fixing fragmentation in the settlement of international trade disputes
Fragmentation in global trade due to the lack of development in multilateral trade rules at the WTO has led to an increase in FTAs. The Appellate Body impasse has further exacerbated fragmentation, requiring a multilateral approach for reform.
Fragmentation in Global Trade
Fragmentation in global trade is not new. With the slow development of multilateral trade rules at the World Trade Organization (WTO), governments have turned to free trade agreements (FTAs). As of 2023, almost 600 bilateral and regional trade agreements have been notified to the WTO, leading to growing fragmentation in trade rules, business activities, and international relations. But until recently, trade dispute settlements have predominantly remained within the WTO.
Challenges with WTO Dispute Settlement
The demise of the Appellate Body increased fragmentation in both the interpretation and enforcement of trade law. A small number of WTO Members created the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) as a temporary solution, but in its current form, it cannot properly address fragmentation. Since its creation in 2020, the MPIA has only attracted 26 parties, and its rulings have not been consistent with previous decisions made by the Appellate Body, rendering WTO case law increasingly fragmented.
The Path Forward for Global Trade
Maintaining the integrity and predictability of the global trading system while reducing fragmentation requires restoring the WTO’s authority. At the 12th WTO Ministerial Conference in 2022, governments agreed to re-establish a functional dispute settlement system by 2024. Reaching a consensus will be difficult, and negotiations will take time. A critical mass-based, open plurilateral approach provides a viable alternative way to reform the appellate mechanism, as WTO Members are committed to reforming the dispute settlement system.
Source : Fixing fragmentation in the settlement of international trade disputes
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