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Why a US-China trade deal could cut out Australia

Former foreign minister Bob Carr talks Huawei, LNG and Trump with TICKY.

The US-China trade war has been blamed for domestic market volatility, but if the two countries do strike a deal, it could be very bad news for Australia’s export sector.

Former NSW premier and federal foreign minister Bob Carr told TICKY on Thursday that Australia’s lucrative liquid natural gas (LNG) sector could be among the hardest hit if the United States replaces Australia as China’s preferred partner.

As the world’s biggest exporter of LNG, the sector has been an enormous driver of economic growth in the last decade – and much of what we export (about 85 per cent) is sent to China.

However, as trade discussions continue between the world’s two largest economies, Carr fears that president Trump is angling for a deal that cuts Australia’s slice of the market.

“There’s no doubt that President Trump is attracted to the idea of a big overarching deal,” Carr, who is the Australia-China Relations Institute director, told TICKY.

“The deal he wants to announce…is the Chinese guaranteeing to buy more American exports,” he explains, “America first.”

Carr believes that if the trade deal tips in favour of the US, it could result in more exports from the US, and less from us.

“China’s contemplating a fourfold increase in its purchase of LNG, and it’d be easy to say that this is going to come disproportionally from the United States and Australia could lose that share of the growth,” he said.

Australia is contracted to continue exporting LNG to China for at least another decade, but with the contracts expiring from 2031, the big question is which country China will turn to next as it looks to replace coal with gas.

With much of China’s coal also imported from Australia, the loss of business could be a double whammy.

Australia’s ‘inept’ handling of China

Australia and China’s increasingly strained relationship surrounding recent dealings with Chinese tech company Huawei has only compounded the issue further, according to Carr.

China took offence last year after Australia banned Huawei technology from being used within its 5G network following intense lobbying from the United States.

While US-led discussions on the matter involved the ‘Five Eyes’ nations – Britain, Canada, Australia and New Zealand – Australia has so far been the only country to officially enforce the ban against Chinese technology.

The manner in which that was handled by Australia’s government was particularly abysmal, according to Carr, who said Australia’s pandering to the US came across as “craven.”

“There’s an ineptitude and a naiveté about the way we do these things that is going to disadvantage us,” he said.

After prime minister Malcom Turnbull reported the ban to Donald Trump, there were reports soon circulating in the media of Australian spy chiefs celebrating the move with other Five Eye nations over an extravagant lobster dinner in Canada.

“I just think if you had to make the decision on Huawei, why would you do it to extract maximum loss of face from China’s preeminent telco company?” Carr asked.

“There’s only one way that you could have read that in China, and that was that Australia made the decision on Huawei not out of local concerns about security, but to please the US.”

While Australia appears all to eager to throw its support behind the US, Carr warned it could ultimately leave us blindsided.

“Australia has got to be a bit careful about being carried along by American enthusiasms on China,” he said.

“It’s all good for us to get worked up and follow the American line on Huawei but it’s always possible for an American president…to suddenly take us by surprise and…cut a big deal that puts America first and locks us out.”

Watch the full interview in the video above.

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