Tag Archives: Politics / International Relations

Pressured by Chinese Tariffs, Australian Farmers Are Growing New Markets | Instant News


SYDNEY – Alan Sattler had been in his tractor for three hours one morning in May, sowing hundreds of kilograms of barley seeds in Western Australia’s dry wheat belt, when he received a text message from his wheat broker. China, its biggest market, imposes punitive tariffs on Australian barley.

Mr. Sattler surveyed his 8,000 acre farm where he had grown 2,500 acres of barley. He called the broker. Now what are we going to do? Mr. Sattler pleaded, preying on his question with “a few interesting curses.”

Australian barley growers are China’s first targets in a a widespread trade dispute out for commodities including coal, grapes and rock lobster. China has been angered by Australian Prime Minister Scott Morrison’s calls for an international investigation into the first outbreak of Covid-19 in central China, seen as interference by foreign governments.

The trade dispute has hurt the country’s barley farmers, which previously exported up to 70% of their crop to China. However, the industry has largely weathered the effects of tariffs, with increased exports of barley and very few bankruptcies, suggesting that trade pressures are restricting certain industries. Many of the tactics they use to survive are now being copied by other exporters, such as Australian winemakers and salmon growers.

Market Movements

Australian barley is heading to the Middle East and Southeast Asia as sales to China dry up.

Export barley all over the world

Export barley all over the world

Export barley all over the world

Export barley all over the world

Total barley exports are expected to increase by 64% in the 12 months to October 2021. Traders have been catching up on sales in other big markets like the Middle East, although that comes with a painful trade-off: Middle Eastern consumers mostly use barley for animal feed, not for making beer, and usually pay less.

Farmers are also switching from barley to crops such as wheat, a trade that China does not dominate. They have sought a unified response, such as by supporting Australia’s challenge on barley tariffs at the World Trade Organization, to prevent divisions that China could exploit.

Barley that is harvested on Mr’s farm. Sattler. Australian farmers seek export markets outside China, such as Saudi Arabia.

Australia’s barley exports to China were worth about $ 1 billion annually before Beijing accused farmers of being subsidized to sell at unfairly low prices and imposing 80.5% tariffs, according to an analytics firm.

IHS Markit.

Many growers have poured profits into developing the barley variety that Chinese malt makers and brewers are seeking.

Other industries have also developed to feed industrialized China and its increasingly affluent middle class. China buys about 80% of Australia’s iron ore, and was a major customer of Australian wine, beef and timber before trade tensions escalated. Australia is a a popular destination for Chinese tourists and students before the pandemic closed national borders.

A decade ago, China accounted for less than a quarter of Australian exports. The share of China is now about 40%. The pandemic has increased Australia’s dependence, as China’s recovery has outpaced other major economies.

Australia is not alone in its dependence on China. In 2001, when China joined the World Trade Organization, more than 80% of countries with publicly available data recorded more trade with the US than China, according to Australia’s Lowy Institute, a foreign policy think tank. In 2018, two-thirds of countries traded more with China than the US

Beijing is increasingly using the weight of its growing economy as leverage to achieve its foreign policy goals. Over the past decade, China has used so-called coercive diplomacy 152 times, affecting 27 countries as well as the European Union, according to an August report by the Australian Strategic Policy Institute, a government-backed security think-tank. It said 113 of those cases had occurred since early 2018.

Australia’s Top Exports

China imports most of Australia’s top 10 exports.

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“The current trade disruption with China, whether related to meat, barley, lobster or wood, is not an isolated incident,” said Rex Patrick, an upper house lawmaker who is out of sync with Australia’s mainstream parties. “Rather it is a pattern of deliberate punitive action by the Chinese Communist government that puts politics above fair trade.”

Australia has been the heaviest target of China’s coercive diplomacy, ASPI said. Prior to Morrison’s call to investigate the origins of the pandemic, Australia had banned Chinese telecommunications company Huawei Technologies Co. and

ZTE Corp.

of the next generation of 5G mobile networks while also criminalizing foreign interference in domestic policies that many think are aimed at China.

As trade relations deteriorated, China criticized Australia for increasing trade barriers. “Since 2016, the Australian government has launched 25 anti-dumping and anti-subsidized investigations of Chinese products,” said a spokesman for the Chinese Embassy in Australia in December.

Beijing has fulfilled its obligations under the free trade agreement with Australia, the spokesman added.

China imposes tariffs of up to 212% on Australian wine, prompting politicians around the world to criticize what it calls “bullying” Beijing. WSJ visits winemakers who hope global attention will help the industry. Photo: Lisa Maree Williams / Getty Images

How Australia’s barley industry copes with Beijing’s reaction could offer lessons to countries that have angered China and hit punitive tariffs. Farmers like Mr Sattler have been hit hard, but are able to cultivate other buyers for their barley crop before switching to other crops.

“A friend of mine said, if you were sitting on the front porch, you would hear 3,950 augers being transferred from barley to wheat” on the day the rates were announced, Mr said. Sattler, 52, a fourth generation farmer.

The barley fields harvested on Mr. Sattler. Some farmers have turned to crops such as wheat, a trade that China does not dominate.

Mr Sattler will cut the barley program in half this year, although he cites crop rotation as well as weak prices for the change.

South Australian producer Andrew Barr plans to cut the share of barley from the farm he inherited from his father to 20%, from about a third last year. This will be the least amount of space allocated to grain for 20 years on the farm.

Another tactic used by the Australian barley industry is growing the market from the Middle East to Japan and Southeast Asia, and even as far as Mexico, reducing its vulnerability to future trade squabbles even if Chinese tariffs are lifted. Traders project that Saudi Arabia will become Australia’s biggest market this year.

“We are happy to sell it to them, and that got us out of jail this season,” said Barr. “But that’s not what I expect from a long-term solution.”

Mr Barr wants the industry to look for malt makers in Korea, Japan, Vietnam, Thailand and India. These markets pay a premium for higher quality barley and are closer to those of the Middle East, which means lower shipping costs.

There are already signs that other industries are copying the move.

Treasury Vineyards Ltd.

, facing Chinese import tariffs for wine of 169%, plans to ship allocated wines to China to other Asian countries as well as to the US and Europe. The company will also increase marketing in these places.

“We immediately called the barley people to talk to them about their experiences, get their advice on how to deal with it and the approach to take,” Tony Battaglene, chief executive officer of Australian Grape & Wine Inc., an association of grape growers and wine producers, said Chinese fare over Australian wine.

Even industries that have so far avoided Chinese restrictions are responding.

Huon Cultivation Group Ltd.

, an Australian fish farmer, decided early last year to ship salmon to the US that had been allocated to China and said it hopes to cut sales to China more to diversify from that market.

This strategic shift will not be easy or quick as exporters face stiff competition, and not all businesses can adopt the same guidelines. Farmers can switch between crops with relative ease.

Australia began consultations with China on January 28, the first step in the WTO settlement process. Trade Minister Dan Tehan said Canberra was considering next steps, including whether to ask a WTO panel judge.

For Australia, commodities like barley are part of its economy. “This is huge for barley farmers,” said AMP Capital chief economist Shane Oliver about the tariff. “But it’s not a disaster for Australia.”

Mr. Sattler with Copper’s dog. Farmers say he is cutting the barley program in half this year.

So far, the market targeted by China only accounts for about 1% of Australia’s gross domestic product, he said.

For many, a market realignment away from China is long overdue, even if it brings short-term suffering to exporters.

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How do you think countries like Australia should deal with economic coercion? Join the conversation below.

John Blaxland, a professor of international security and intelligence studies at the Australian National University, said Australia’s trade relations with China had reached a turning point reminiscent of Britain’s decision in the 1970s to join the European Union. At that time, Australia was forced to divert its trade efforts from Britain.

“We have been leaning towards the biggest prize for the last two decades: China,” said Prof. Blaxland. “In doing so, we have neglected opportunities closer to home.”

Write to Rhiannon Hoyle at [email protected]

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Brazil’s free market agenda is in doubt as the president hopes for re-election | Instant News


SÃO PAULO – Brazil’s Economy Minister Paulo Guedes, who just two years ago pledged to lead a free-market revolution in Latin America’s largest country, is increasingly finding himself relegated to breaking control as President Jair Bolsonaro deepens the role of the state in the economy.

Guedes’ mission to lower public debt and build investor confidence in Brazil took a hit after the country’s far-right leader on Friday nominated a new head of the country’s oil company.

Brazilian Oil

SA, or Petrobras, spurred investor flight this week from the nation’s equities and currencies.

With a focus on re-election next year, Mr Bolsonaro, a former army captain who has publicly said he knows nothing about the economy, nominated a military man to the helm of the company after the current chief executive refused to lower fuel prices.

Petrobras said Tuesday it will schedule meeting to assess presidential nominations of a new CEO.

“It is now clear that the president himself is not as committed to a liberal economic agenda as the public once thought, even though his finance minister does,” said Bernard Appy, former secretary of economics at the ministry.

The Petrobras Refinery in Rio de Janeiro; the company said it would meet to assess President Jair Bolsonaro’s candidacy as new CEO.


Photo:

Andre Coelho / Bloomberg News

Guedes, a 71-year-old investment banker who only entered politics in 2019 when Bolsonaro took office, has remained silent since the president on Friday night appointed General Joaquim Silva e Luna as CEO of Petrobras. Mr Bolsonaro and Mr Guedes declined requests on Wednesday for comment.

A person close to the minister said the economist who graduated from the University of Chicago had no intention of leaving Bolsonaro.

The minister knows that his exit will only scare investors even more, and he still believes he will have the opportunity to undertake a series of reforms to improve Brazil’s business environment, such as simplifying the country’s Byzantine tax system and introducing new rules to curb government spending, said a familiar person. with ministerial thoughts.

“Of course he is not happy with what happened [at Petrobras], “Said the man, adding that the minister felt less responsible for oil producers than other areas of the economy because it was under the scope of the ministry of mining and energy.

Brazil’s Minister of Mines and Energy, Bento Albuquerque, an admiral in the Navy, said in an interview that the government was simply seeking greater stability in fuel prices, denying that it would intervene or force Petrobras to pay subsidies.

“It is the president’s prerogative as controlling shareholder to appoint whoever he wants,” he said, adding that the government was studying ways to avoid sharp swings in fuel prices, including creating funds that could be announced in two months.

In an interview with The Wall Street Journal in October, Guedes described how he had long planned to venture into politics, his hopes were high for what he could achieve.

Co-founder of Latin America’s largest investment bank, BTG Pactual, Guedes says he has been inspired by the likes of Ronald Reagan and Margaret Thatcher to reduce the size of Brazil’s swelling government.

“We will give up market power,” said Guedes, defending the president.

“Bolsonaro really wants to change the country,” he said. He explained that he sees Bolsonaro’s government as an alliance of liberal and conservative economies and is the country’s best bet to decide the way of the two left-spending presidents who have preceded Bolsonaro.

The support of Mr Guedes during Mr Bolsonaro’s election campaign was critical to getting votes from centrists and business leaders, sealing a conservative victory.

But the others saw Mr. promise. Guedes as unrealistic and naive, shows the mentality of a business leader who has never worked with politicians before.

“He created expectations of a liberal revolution that he never had the means to carry out,” Luiz Carlos Mendonça de Barros, former head of Brazil’s state bank BNDES, told the Folha de S.Paulo newspaper. We watched and laughed, anyone who has experienced the boundaries of politics knows what I mean.

Mr. Government. Bolsonaro is off to a good start in the eyes of investors. In its first year in office, the country went through a long-awaited overhaul to downplay Brazil’s generous pension system, which is estimated to have saved public accounts an estimated $ 200 billion over a decade.

The president filled his government with market-friendly figures, appointing another Chicago alumni, Roberto Castello Branco, as chief executive of Petrobras. Meanwhile, Guedes set his sights on the privatization of hundreds of state-owned companies, from banks and power companies to the state postal service.

Slow progress. Then the pandemic hit.

Covid-19 has hit Brazil, killed a quarter of a million people, and sparked widespread criticism of Mr crisis management. Bolsonaro. Faced with growing demands from political opponents for his impeachment, the great leader returned to the populist movement to please his political base – a strategy analysts say marked his nearly three decades as a congressman.

If successful, Bolsonaro will ensure his short-term political viability and increase his chances of being re-elected in next year’s presidential election, political scientists say.

Bolsonaro issued a presidential decree to loosen gun ownership rules with a nod to his conservatives, while supporting a program of generous payments for the poor. Mr Guedes, seeking to safeguard the country’s fiscal health, has suggested paying less than $ 40 a month per person; the government has tripled that figure.

After spending as much as $ 10 billion a month on payments during last year’s pandemic, the country is preparing to resume payments in the coming weeks. Brazil released figures on Wednesday showing its public debt hit a record in January, rising to an estimated $ 930 billion.

But many investors see Bolsonaro’s nomination of Petrobras as the boldest move, contradicting his administration’s promise to reduce the size of the country in the economy and the president’s own promise to let the country’s oil companies set prices according to international markets. .

On Monday, on the first full trading day following Mr Bolsonaro’s candidacy for General Silva e Luna, investors fled Petrobras, wiping out about $ 13 billion from the company’s market value, the second biggest daily loss for the company since the 1990s.

The candidacy followed a dispute between Bpk. Bolsonaro and the current CEO of Petrobras are concerned about rising fuel prices, fueling concerns that the president intends to force companies to fund fuel subsidies in the country again – policies that cost around $ 30 billion between 2011 and 2016 under leftist administration.

While oil producer stocks have recovered since then, economists say it will take a long time to repair the damage to the reputation of companies and countries.

“Who is a Brazilian or foreign investor who wants to buy Petrobras shares?” said Maílson da Nóbrega, a Brazilian economist and former finance minister who praised Guedes for his optimism. “I thought [Mr. Guedes] hopes that he can push for reforms and leave his legacy, but it is becoming increasingly difficult. “

Write to Luciana Magalhaes and [email protected] and Samantha Pearson at [email protected]

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Italian Residents Join the Establishment | Instant News


Mario Draghi speaking in Washington, October 14, 2017.


Photo:

jim watson / Agence France-Presse / Getty Images

Italy, like the US, has recently completed experiments in populist governance. The anti-establishment Five Star Movement and the anti-immigration League formed a coalition after general elections in 2018, but the coalition broke up after less than a year. As in America, the new head of government is an established figure. But unlike President Biden, Prime Minister Mario Draghi is better known as a politician than a technocrat: an economist with a doctorate from MIT who heads the Italian Ministry of Finance, the Bank of Italy and the European Central Bank. He shuns social media and rarely gives public interviews or speeches.

“When I was prime minister, Mario Draghi was the director general of the Treasury. I know him personally and professionally, “Lamberto Dini told me. He led the government in 1995-96, “He was very quiet. He would only call when there was a problem to solve, and he would solve it. He’s not just a technocrat; he is a great political figure. ”

Mr Draghi, 73, is best known for rescuing the euro during its debt crisis in 2012. He promised in his speech that the ECB will do “whatever is necessary” to save the eurozone, stopping international speculation on the currency.

This month President Sergio Mattarella appointed Mr Draghi to head the national unity government. Unlike in the US, there is no populist reaction to the new established leader. In contrast, the anti-establishment Five Star League and Movement was so eager to join the new cabinet that they abandoned their previous eurosceptic positions. The coalition also includes the center-left Democratic Party, the free market Forza Italia, and the socialist-democratic Free and Equals Party. The only opposition party is the far-right Brothers of Italy.

The unelected Mr Draghi was very popular with voters. According to a survey by Noto Sondaggi, Italy’s leading poll, 56% of Italians trust him – the highest number recorded in two decades. Markets seem to share the feeling: The Italian bond yield benchmark hit a record low after the appointment.

Bringing together a diverse coalition will be a challenge for the new prime minister. For starters, he reappointed Luigi Di Maio Five Star as foreign minister. Mr. Party Di Maio opened Italy to the Chinese Communist Party by signing the Belt and Road Initiative. Mr Draghi is committed to Italy’s alliance with the US and needs to persuade the Five Star Movement to change course.

In a country where Covid has been particularly hard-hit, Mr Draghi will also manage an aid program larger than the Marshall Plan – $ 240 billion from the European Union’s Recovery Fund. He oversaw the ECB’s quantitative easing after the 2008 financial crisis, and he appointed League members to the major economics ministries, a signal that he plans to increase productivity by reducing taxes and reforming inefficient bureaucracies. Expenditures will be directed carefully to businesses with prospects for success and unemployment.

“It looks like we’ve come to an agreement,” Giovanni Orsina, historian and dean at Rome’s LUISS University, told me. Voters vote for anti-establishment parties, but they lack the competence to lead. Italy will find out if a trusted leader can satisfy popular discontent by combining expertise with a different populist vision.

Ms. Bocchi is Joseph Rago’s Memorial Fellow of the Journal.

Journal Editorial Report: Paul Gigot interviews economist Douglas Holtz-Eakin. Image: Stefani Reynolds-Pool / Getty Images

Copyright © 2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appears in the print edition of February 25, 2021.

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Facebook will restore news in Australia after the government agrees to amend the bill | Instant News


Facebook Inc. will restore links to news articles in Australia, five days after blocking news from its platform in response to a proposed law requiring tech giants to pay publishers for their content.

“We are restoring the news on Facebook in Australia in the coming days,” said Campbell Brown, vice president of Facebook’s global news partnership, in a statement late Monday.

Facebook
FB,
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said it had reached an agreement with the Australian government to amend the bill, allowing, among other things, a two-month mediation period to reach an agreement with the issuer before entering arbitration proceedings if an agreement cannot be concluded.

“After further discussion, we are satisfied that the Australian government has agreed to a number of changes and guarantees that address our core concerns about allowing commercial deals that recognize the value our platform provides to publishers in relation to the value we receive from them,” Facebook said in a separate statement. .

The resolution comes after talks between Facebook CEO Mark Zuckerberg and Australian Treasurer Josh Frydenberg over the weekend.

The social media giant suddenly blocked news articles from its platform last Wednesday in response to upcoming legislation, in motion invite criticism. At the time, Facebook said that the Australian government “fundamentally misunderstood the relationship between our platform and the publishers using it”.

Alphabet
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Google, faces the same regulations, instead entered into a series of deals with Australian news publishers to obey the law.

The Australian Parliament is expected to approve the bill – which is meant to support journalism – soon. Other countries, including Canada, see the Australian model as a roadmap for additional regulation in their country.

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US Report Allows Russia’s Pipeline Project to Continue, for Now | Instant News


The State Department in a report to Congress did not identify the new company as a target for sanctions related to a $ 11 billion pipeline designed to deliver Russian natural gas to Germany, allowing pipeline work to continue for now.

Some Republican lawmakers have criticized the State Department for the Nord Stream 2 report, which is required by Congress, and both Republicans and a key Democrat are asking for an explanation of government positions.

The Trump administration, urged by Congress, signed legislation in 2019 and 2020 that stopped construction of the pipeline for more than a year until resumption earlier this month. The Biden administration called the project a “bad deal,” but Nord Stream 2 is forming a pressure point between the new government and the bipartisan Congressional coalition that has attacked the project.

The report is expected to provide list of companies involved in pipeline construction and therefore subject to US sanctions. In contrast, the State Department named two entities previously sanctioned by the Trump administration – the main pipeline laying vessel and its owner – along with 18 companies, mostly insurers, that had either left or left the project.

Failure to set new targets for sanctions allows work to continue while also allowing time for administration discussions with Germany about the project and to formulate its own policies on the pipeline.

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