Why the federal government is challenging the US trade investigation
Updated ,first published
The Trump administration angered the federal government by proposing a new 12.5 percent tariff on Australia and several other countries for allegedly failing to act to prevent slavery.
An investigation by United States Trade Representative Jamieson Greer found that Australia “failed to enforce and effectively enforce its forced labor import ban”.
The investigation concluded: “The results of this investigation establish that Australia’s actions, policies and practices in failing to impose and effectively enforce the forced labor import ban are unreasonable and burden or restrict U.S. trade.”
Fifty-four countries were affected by the same 12.5 percent tariff, including China, Vietnam, Japan, the United Kingdom, and New Zealand. investigation Similar language is used in dozens of countries.
A separate group of six economies – Canada, the European Union, Ecuador, Indonesia, Mexico and Pakistan – faced a lower 10 per cent tariff because the investigation found they were the only countries “that have not failed to impose a forced labor import ban.”
The current 10 percent tariff, which the Trump administration imposed on all countries, including Australia, in February is expected to expire in July.
Government sources said they were struggling to understand the implications of the proposed new tariff but believed it would not go above the current 10 percent tariff. This means that, if implemented following a consultation process, Australian exports would increase from a 10 per cent duty rate to 12.5 per cent.
A spokesman for Trade Minister Don Farrell said: “Australia remains our position that any tariffs on Australian exports to the US are unfair and inconsistent with our free trade agreement.
“Australia has robust, comprehensive and world-leading legislation against forced labor and modern slavery.
“We continue to use every opportunity to argue that the US tariffs on Australia are unwarranted.”
John Kunkel, a senior fellow at the Center for United States Studies at the University of Sydney, said: “It is clear that Greer has been tasked with restoring elements of the Trump tariff regime that the Supreme Court invalidated in its decision on ’emancipation day’ tariffs. This appears to be his attempt to put US tariffs on a firmer legal footing.”
Beef, a major Australian export to the US, will be exempt, as will other foodstuffs, metals, some fuels and chemicals.
The US investigation found that countries, including Australia, “subject US producers to unfair competition through forced labor goods in both export markets and the US market, diverting foreign goods produced without forced labor or forced labor inputs from their domestic markets to the US and other markets.”
Human Rights Law Center deputy legal director Freya Dinshaw said alarm bells had long been ringing about the risk of goods produced using forced labor filling the shelves of Australian stores.
“If the US is considering punishing countries that do not take adequate steps to prevent forced labor in their global supply chains, then Australia is truly vulnerable,” he said.
Australia’s anti-slavery commissioner Chris Evans warned in January that Australia risked becoming a dumping ground for goods produced using forced labor banned elsewhere.
For example, certain goods or materials that are subject to import restrictions in the United States due to risks of forced labor are currently able to enter the Australian market, including certain bicycles, seafood, clothing, cotton and polysilicon.
These import bans also have implications for Australian businesses that export goods to countries that have adopted these measures and supply products to businesses operating in these markets.
It is estimated that approximately 50 million people worldwide, and 41,000 in Australia, are trapped in conditions of modern slavery and forced labour.
Many developed countries, such as the United States, Canada, Mexico and the 27-member European Union bloc, have introduced or are preparing to impose an import ban on goods produced with forced labor.
Modeling from Fair Supply, a supply chain risk intelligence platform, estimates that more than 21 per cent of all goods brought into the country last financial year – around $1 in every $5 spent on imports – were linked to supply chains where coercion, debt bondage and other forms of modern slavery are known to occur.
In March, the UN Committee on Economic, Social and Cultural Rights called on Australia to implement mandatory human rights due diligence under the Modern Slavery Act and report on progress within 24 months.
Last month, a powerful alliance of more than 100 investors, businesses, unions, non-governmental organisations, academics and victim advocates called on the federal government to prioritize the introduction of due diligence requirements for large companies operating in Australia.
The 105 signatories include investors representing trillions of dollars in funds managed, eight national and state associations, and more than 30 non-governmental organizations from five continents.
The proposed reforms would shift corporate efforts from focusing solely on reporting to taking action by promoting a “proportionate and results-oriented approach to tackling modern slavery” in line with international standards.
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Matthew Knott is the foreign affairs and national security correspondent for The Sydney Morning Herald and The Age.Connect with: X, Facebook or email.
Rob Harris is a national correspondent for The Sydney Morning Herald and The Age, based in Canberra. He is a former European correspondent.Connect via email.
