Crean Tackles Chinese Over Iron Ore Wrangle
Sydney Morning Herald
Friday April 18, 2008
THE Trade Minister, Simon Crean, has posted Australia's first high-level complaint about Chinese steel mills blocking Australian shipments of spot-market iron ore.In talks with China's Commerce Minister, Chen Deming, Mr Crean warned China not to breach World Trade Organisation (WTO) regulations and called for Australian mining companies to hand over evidence that China had breached market access rules.According to Mr Crean, Chinese authorities said the import licensing system that was used to hold up Rio Tinto and BHP Billiton cargoes was designed to control "port congestion". "We have reinforced very strongly the importance of the application of those licences being consistent with WTO obligations," he said.Chinese officials, in turn, registered new concerns about high iron ore prices."Obviously there's concerns about the increase in prices because they've got a concern about inflation," Mr Crean said. "We've made it clear that we're not going to interfere with the market on price. But we are prepared [to consider] the question of reliability over the long terms of supply."In February, the Brazilian miner Vale sealed a deal with China's biggest steel maker, Baosteel, to raise iron ore prices by 65 to 71 per cent.The new contract prices kicked in on April 1 but Rio Tinto and BHP Billiton are holding out for a larger price increase that includes a "freight premium" to account for cheaper cargo rates from Australia.Senior Chinese officials have registered their displeasure.But tensions over iron ore did not prevent the ministers from building on what Mr Crean described as "last week's breakthrough" between the Prime Minister, Kevin Rudd, and China's President, Hu Jintao, on trade talks.Mr Crean said China had committed to providing a revised offer on tariffs, including on agricultural goods, which he expected in formal negotiations in June or in informal preliminary talks. Mr Crean said the conditions for successful WTO and bilateral trade talks had recently improved.He said the unfolding credit crunch had prompted politicians to look for a trade deal in order to bolster economic certainty, while rising food prices had helped ease domestic political resistance to trade liberalisation."If you're ever going to free up food subsidies you're going to do it when farmers aren't under as much pressure," he said. Mr Crean also raised the issues of Tibet and human rights.But he said those issues were "decoupled" from trade talks because the two ministers had agreed to discuss the sensitive subjects as members of their respective parties, the Labor Party and the Communist Party, rather than as government representatives. And he said there was "no fall out" from Mr Rudd's human rights advocacy last week.