Save the Timber for Australia, Not Beijing

Commentary Dictatorships don’t make concessions unless they are forced to do so. They don’t make concessions as a unilateral goodwill gesture. Their concessions are only ever made out of self-interest. Therefore one can safely assume that the lifting of the ban on Australian timber exports to China, which was so spuriously imposed by the communist dictatorship on “quarantine” grounds, is fully enveloped in self-interest. Australia has high quality timber products. China was only importing the product for one reason, it was needed. Today they still need the product. The ban, without doubt, had consequences for China but was done as part of the belligerent dictatorship’s response to the not-unreasonable request by Australia that there be an international inquiry into the origins of COVID. Timber bans were part of the reprisals inflicted on Australia by China for its COVID inquiry request. Barley, cotton, copper, seafood, and other exports faced a similar fate blowing a $14 billion (US$9.3 billion) hole into Australia’s export earnings. On the barley issue, Australia immediately took China to the World Trade Organization (WTO), where the matter was being adjudicated with a decision pending. In what seems more than a coincidence, the lifting of timber imports came as Australia withdrew its WTO action against China over barley. Most commentators predicted an adverse ruling for China. So just before the determination, Australia inexplicably withdraws its winning case to halt a positive ruling in Australia’s favour. Really? Timber supplies are seen during a workshop tour in Blackburn, Melbourne, Australia on April 20, 2023. (AAP Image/James Ross) There is no doubt an adverse ruling does reputational damage to the loser. China was anxious to avoid such a ruling which would’ve been proof positive (if needed) for many that Beijing was acting as a bully without justification. At the same time, timber bans on Australian exports to China are lifted. It has all the qualities of a deal and is not a very smart one from Australia’s standpoint. Clearly, the Chinese dictatorship was willing to concede on timber imports (a product that it needed anyway) to avoid a damaging adverse ruling. For China a no-brainer win-win. Don’t Give Bullies an Inch Australia had previously been exporting 1.6 million tonnes of sawlogs and two million tonnes of pulp logs to China annually. An export market worth hundreds of millions of dollars. Its abrupt closure cost Australia’s forest sector dearly, including 100 jobs. By letting China off the hook on the WTO ruling over barley, Australia has shown weakness. Bullies cannot and should not be appeased. If a concession is required for the short term, it will be made by the bully, who will be looking for the next opportunity. Barley crop being harvested on the property in central-west New South Wales, Australia. (Greg Wood/AFP via Getty Images) Winning back markets is the stuff of short-term media headlines but should not be made on the basis of unprincipled backroom deals. As for the forestry sector, it would be well advised to steer clear. A belligerent bully doesn’t change their behaviour. Re-establishing a market with the associated expensive supply chains and logistics will be an extremely risky business. What is more, Australia is, in fact, a net importer of timber products. How this can be possible given its huge land mass and various climatic conditions conducive to wood production is an issue that the extreme elements in the environment movement and weak governments need to answer. As this column is being written, builders are facing a shortage of wood supply exacerbating the housing shortage and ever-increasing costs. The removal from this market of 1.6 million tonnes of saw logs to enable its export to China would be unhelpful. The question also remains whether producers would be willing to make the resource available to China. In the end, it may be a worthless victory making the withdrawal of the WTO action highly questionable, with China’s dictatorship playing Australia’s trade negotiators like a violin. Time will tell. As an aside, the closure of Australia’s many production forests has seen the cost of housing increase and the use of non-renewable building materials such as plastics, steel and aluminium being deployed. While wood is a carbon store, and its alternatives are responsible for high levels of CO2 emissions, extreme environmentalists continue their mindless campaign against all types of forest production. As Australia faces a timber shortage which is playing into Australia’s costly housing shortage, the re-opening of a timber export market to China can hardly be claimed as a negotiated, let alone a strategic, win for Australia. A full WTO verdict over China’s barley ban may well have served a better long-term outcome all around. In the meantime, Australians waiting for a house will be hoping that not too much of Australia’s timber goes into con