ROMAN KILISEK reports that recently the Australian Prime Minister, Tony Abbott, warned at the opening of the Caval Ridge coal mine in Queensland against the demonization of coal. According to the Sydney Morning Herald, PM Abbott stressed that coal is good for humanity, coal is good for prosperity, coal is an essential part of our economic future here in Australia, and right around the world. He then went on to praise a great partnership with Japan in the coal industry. The PM Abbott remarks come on the heels of Chinese Ministry of Finance announcement that import tariffs for anthracite coal and coking - i.e. met- coal will return to 3 per cent, while non-coking - i.e. thermal - coal will have an import tax of 6 per cent.
These new tariffs on coal imports seem to have come at a critical juncture in negotiations between Australia and China. Jenni Ryall of Mashable notes that this action falls just a month before the China-Australia Free Trade Agreement expected to be signed at the G20 Summit in Brisbane on November 15-16, 2014. In this respect, it is important to understand that prior to this move, existing free trade agreements (FTAs) see, for example, Indonesian FTA with China are able to shield countries from the above import levy. Consequently, the Australian government will have to hone in on the coal import tax issue during the final stretch of bilateral negotiations.
For Australia, this also significantly ups the Chinese-FTA ante and explains the PM Abbott vocal domestic coal industry support. The coal import tax implications are likely behind the Abbot praise for Japan and could be viewed as nothing short of a dig at China, as well as a bargaining ploy. Bloomberg quotes PM Abbott as saying that this is the kind of hiccup in our biggest and most important trading relationship that we just do not need.
Also see: https://i2mconsultants.com/downloads/corp/campbelljustnotforburning-july19-2014col.pdf
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