As China fires the first volley of trade embargos across the strait, Australia’s trade war experience offers valuable lessons for Taipei
When Beijing banned imports of Australian wine last year, Taiwan showed its support with a statement from President Tsai Ing-wen, while officials circulated the hashtag ‘#Freedom Wine’ on Twitter. Now, it is Taiwan’s agricultural products that are in Beijing’s crosshairs. After China halted imports of Taiwanese pineapples starting March 1, Taipei quickly repurposed the hashtag as ‘#Freedom Pineapples’ and rallied friendly nations for support. Representatives from the US and Canadian trade offices responded by posing with Taiwanese pineapples for the media, while Australia stepped up to ink a deal to begin importing Taiwanese pineapples starting in May.
Yet, beyond the memes of solidarity and initial bilateral trade support, the ‘pineapple moment’ offers a real diplomatic opportunity for both countries to forge closer ties and amid their ongoing shared experience of economic bullying from Beijing.
Pining for more variety
Australia’s signing of the import deal is promising and a welcome relief to the immediate impacts of the ban. Yet, to make sure it becomes more than a temporary band-aid solution, the two countries’ agricultural authorities should work to achieve parity on food safety measures and consider how to optimize freight arrangements to lower the cost of transporting the pineapples to Australia.
Besides being a new market to help diversify away from China, Australia can also offer Taiwan’s pineapple industry diversification in both pineapple species and the ways the fruit is consumed.
Australia is also a pineapple producer, with the largest being grown in the country’s tropical north in Queensland. Yet, pineapples should not simply be seen as a source of competition between the two countries. Rather, as I pointed out in a Taipei Times column, Taiwan’s Agricultural Research Institute signed a Memorandum of Understanding with the Queensland state government in 2017and sent four local varieties of lychee to be grown in the tropical state, taking advantage of the complementary climates to extend the fruit’s short growing season. As the former head of the Australia-Taiwan Business Council, Ross Maddock told me in an interview at the time, both countries must pursue more joint-projects like these that match Taiwan’s superiority in tropical horticulture with Australia’s climate conditions.
In fact, Taiwanese officials are now calling on the government again to put more resources into R&D to develop more fruit varieties, such as the recently developed mango-pineapple hybrids, so as to upgrade the nation’s agriculture industry. The fact that researchers at the University of Queensland last year released new innovations to prevent premature flowering of pineapples, which they claim will transform pineapple yields globally, shows how collaboration on pineapple research would also be fruitful.
Innovating new fruit varieties together would increase the spectrum of agricultural products Australia and Taiwan produce, giving both a competitive advantage in the global markets outside of China. It would also give both countries a deeper presence in one another’s markets, unlocking deeper understandings of their consumers’ tastes. Australia, whose consumption habits are closer to those of Europe and North America, while being geographically closer to Taiwan, could act as a testing ground for Taiwan to test newly developed processed pineapple products, such as dried pineapple, pineapple cakes, or variations upon the famed pineapple cake.
Australia can even offer inspiration for the food scene here in Taiwan. As sellers try out new ways to serve up the versatile fruit, breakfast stores and hamburger stores could take inspiration from an Australian classic — the famed ‘Aussie burger’, which includes pineapple slices. Australian officials could make the most of the current pineapple buzz in the local media and pose with Aussie burgers, just as their Canadian counterparts did with their own delicacy – the Hawaiian pizza.
Beyond the pineapple buzz though, the real value for Taiwan here is to learn from how Australia managed to handle trade bans on multiple fronts simultaneously.
Beijing first banned beef and barley in May of last year. With over half of all Australian barley previously sold to China, this was a major blow and caused exports to spiral immediately. As relations deteriorated further over the year, Canberra eventually decided to take the barley ban to the WTO in December last year, the final result of the arbitration which has yet to come out. It was also important that Australia didn’t retaliate with its own set of embargos, which, would cause it to lose the higher and undermine its chances of success at the WTO.
Taiwanese officials are also considering similar arbitration on pineapples, should Beijing not first come to the negotiating table. But before Taiwan takes the case to the WTO, it must prepare a multi-tiered prosecution strategy that counters Beijing’s increasingly sophisticated tactics of legal obstruction. As Australian analysts Darren Lim and Victor Ferguson have pointed out, is China’s effective use of informal retaliation practices rather than announcing formal legal sanctions, which affords Beijing greater ‘plausible deniability’ against any charge of violating international trade rules. Claims that Taiwanese pineapples were infested with insects is a textbook case of this. Canberra can share its legalistic strategies with Taipei, such as why it opted to trigger the “multi-party interim appeal arbitration arrangement” (MPIA) mechanism.
Australian industry also now has the hard-earned experience it can share on how to pivot fast and diversify, although results may vary greatly across industries. Despite a dramatic uptick in sales volume in the UK, France and US, as of January this year, Australian wine exports still fell by 53% year on year. Iron ore, on the other hand, a mineral that Beijing is totally dependent on sourcing from Australia, actually grew off the back of rising demand for the mineral in step with China’s economic recovery. This shows the limits on how far embargos can go, as Australian energy analyst Clyde Russel explains, “if you still need the products you are targeting for tariffs or import bans, it will cost more to source them from other suppliers.”
Taipei needs to identify key sectors where it heavily relies on Chinese demand but where Beijing is not as reliant on Taiwanese suppliers and may easily replace them. It is in these areas where China will have an asymmetric advantage and this is where Taiwan will need to ready itself.
For Beijing, pineapples are an easy pick for a trial run to test Taipei’s response to import bans without wading into more critical sectors of the economy. Although 90% of Taiwan’s pineapples are consumed domestically, nonetheless, roughly 97% of the 10% that are exported go to China. That those hardest hit by the ban will be farmers located in the rural south, where the ruling DPP’s traditional heartland of supporters, also points to the political calculus involved on Beijing’s part.
‘Politics comes first’
This is a reminder to both countries they must look beyond the immediate economic impact of these embargos and come to terms with Beijing’s long-term strategic calculation – that, despite being played in the arena of trade, this is a game that aims to secure political rather than economic interests.
Last December, for instance, when China suffered severe power outages due to its embargo on Australian coal, the government instructed industry to reduce power usage to reduce the fallout. As one Chinese business leader said at the time, “We don’t expect the government to relax the embargo just because of the trouble it has caused… Politics come first.”
This here holds a lesson for Taiwan – China is driven to achieve its political ends even if the trade bans don’t make economic sense and they inflict domestic pain on itself in the process.
This makes sense when viewed in light of Beijing’s grand strategy. As has been noted by Dirk van der Kley, the economic punishments metered out to Australia are meant less to discipline the Australian public and more as a warning to other nations in Asia, including Taiwan, of how far China will go to quash opposition to its agenda. Viewed in light of the popular Chinese proverb, ‘killing the chicken to warn the monkey’, Australia may be said to be the proverbial ‘chicken’, while Taiwan is one of the main ‘monkeys’ being ‘warned.’ If the pineapples signify anything, it is a warning shot, a hint at the potential pain Beijing could exact on Taipei if it decided to.
Beijing will continue to hone its strategy going forward, so Australia and Taiwan must increase exchanges and convene regularly to track patterns in Beijing’s behavior so both countries can preempt the superpower’s next move and minimize the fallout. Only by standing together can both countries uphold their economic competitiveness, national sovereignty and democratic norms and sustain a free and open Indo-Pacific together.
Liam Gavan Gibson is a Taipei-based analyst mainly covering Chinese foreign policy in the Indo-Pacific. He is also an editor of Policy People, an industry newsletter for think tank experts. The views and opinions expressed in this article are those of the author.