Free-trade agreement is good for us, but a cow for China’s farmers

Ed Gannon
Herald Sun, 28 May 2015

IT’S not often that we stop to consider the yin and yang of life — that often when something good happens to us, someone somewhere else suffers.

You win an auction battle for a house, someone else loses the bidding. You win a highly sought-after job, someone else has lost an opportunity.

A big supermarket opens, a small local milk bar suffers, perhaps even closes.

One company wins a deal and it is often at the expense of another company. And it is now clear that will be the case with the deal Australia has struck with China to reduce trade barriers.

The free-trade deal has been widely viewed as a win for Australia, particularly in agriculture. Yet few stop to consider the impact of the agreement on other countries.

That was laid bare this week in a rare candid moment by a senior Chinese government official in Beijing.

Dr Shen Guiyin made the startling statement that “after the free-trade agreement is in operation, we expect the Chinese dairy industry is going to suffer a lot”.

“There is definitely no dispute on that,” Dr Shen said.

He then went even further.

“I think China is sacrificing the dairy sector to promote free-trade between the two countries.”

In a country where pride and saving face is of the highest priority, for a senior government figure to make such an admission is extraordinary.

In the past 10 days I have travelled on a media delegation through China and found a consistent reluctance of local officials to countenance any suggestion their own country may have blemishes.

When questioned by the Australian media about negative aspects of China, many were quick to draw attention to the shortcomings of other countries, Australia included.

Yet, despite being among the highest-ranking officials we met, Dr Shen was the most open.

He is deputy director-general of the Ministry of Agriculture’s Research Centre for Rural Economy. The centre plays a pivotal role in developing policy for the Chinese Government. In many cases, what Dr Shen recommends ends up being national policy that affects the lives of more than half of China’s 1.35 billion people.

The China Australia free-trade agreement is expected to come into effect later this year. And once China eradicates all tariffs on dairy products in five years, Dr Shen expects Australian products to begin their long march into China.

“Once the FTA is signed and the tariffs are scrapped, we expect we will be importing a lot of cheap dairy products from Australia,” he said.

“Your dairy producers are obviously more competitive than Chinese domestic dairy farmers. I guess you have bigger lands, your cows are free range and are very cheap to raise.”

And you thought there was nothing Australia could do cheaper than China.

Which brings us to the flip side. There are many industries that have been hurt over the past two decades as Asia’s manufacturing capacity has expanded and hit full steam.

The Australian car industry has collapsed due to a flood of cheap Kias and Hyundais from South Korea, and any electronic or component manufacturing we may have had has been decimated by countries such as China. We rarely make clothes in this country and we don’t even manufacture the cans to put our fruit in any more.

China’s dairy farmers are definitely not happy with the trade deal. But as callous as it may sound, it’s about time we had a win, even if it is at the expense of others.

So chalk one up for the humble Aussie cow.


This article was originally published here.
Ed Gannon was in China for the China Australia Journalist Exchange 2015.