With Australia-China relations souring, will RCEP bloom?

Tension between China and Australia—both members of the proposed mega Regional Comprehensive Economic Partnership (RCEP)—has been on the rise since the outbreak of the coronavirus pandemic. On Tuesday, China Mengniu Dairy, which was eyeing to acquire Australian drinks major Lion Dairy & Drinks, withdrew from the race after the company said that the regulatory approval for the deal was unlikely to come through.

Last week, the dragon initiated an anti-dumping probe on imported wine from Australia, coming in 2-litre bottles or less. The Chinese government alleged that Australian wine was being sold as below market price in China.

The investigation will take about a year to complete.

“We do find this deeply troubling, concerning and perplexing given Australia’s wine industry is not subsidized to export and it’s certainly not dumping product on the world market,” Global Trade Review (GTR) quoted Australia’s trade minister Simon Birmingham as saying. “It’s for China and Beijing to explain the rationale behind these actions and why they have moved to the stage of an investigation.”

https://edition.cnn.com/2020/08/25/business/lion-dairy-australia-china-intl-hnk/index.html

Can RCEP be a success amid growing tension? Two trade experts IN spoke to raised their doubts over the signing of the RCEP in the form envisaged. India had already pulled out of RCEP last year but, despite the outbreak of the coronavirus pandemic, the other members had been keen on taking forward the mega trade deal.

“Is it possible to ink a deal of that magnitude with such acrimony and the problem between the two countries? It is not just purely political but linked to trade as well,” one of the two experts said. The other expert added that even if the deal is signed, it will be a watered-down version of what had been perceived in the beginning.

There are 15 countries on board—China, Japan, South Korea, Australia, New Zealand, Vietnam, Thailand, Singapore, Philippines, Myanmar, Laos, Malaysia, Indonesia, Cambodia and Brunei.

Trouble has been brewing between the China and Australia for a few months now. Australia joined the chorus seeking an independent international probe into the origins of coronavirus or Chinese virus as it is referred to. China was quick to register a sharp criticism and accused Australia of “taking instructions from the US.”

https://in.reuters.com/article/health-coronavirus-australia/australia-seeks-probe-into-coronavirus-spread-france-and-uk-say-now-not-the-time-idINKCN2240UZ

Subsequently, in May the dragon imposed 80 per cent tariff on barley imports from Australia it also banned beef imports from four Australian four firms.

China, typically considered the factory of the world, exported goods worth $2.499 trillion in 2019. China and Australia have been quintessentially strong trading partners. Last year, 40 per cent of Australian exports were directed to China. A decade ago, these were only 20 per cent..