Australia Cancels Subnational Initiatives with China

Federal government intervenes between Victoria and China . . .

On Wednesday, Australia's Foreign Ministry cancelled four agreements between the state of Victoria and Iran, Syria, and China. The two cancelled China pacts were an initial four-page Memorandum of Understanding signed in October 2018, and a nine-page framework completed the following year. Both sought to increase infrastructure collaboration between China and Victoria as part of China’s Belt and Road Initiative (BRI). The Iran and Syria agreements sought to promote educational linkages and were both about 20 years old. Analysts quickly pointed out that Canberra’s target was Beijing.

Canberra’s new powers . . .

Both subnational agreements with China were under scrutiny from the start, as Victoria didn’t get the federal government’s blessing. Canberra refused in 2017 to endorse and join the BRI. But Victoria proceeded anyway and justified the deals with an expected boost to local economic prosperity and employment. Canberra deemed the agreements to be inconsistent with its foreign policy and, in December 2020, Parliament passed the Foreign Relations (State and Territory Arrangements) Bill, allowing it to review and cancel any agreement between Australian states, territories, local governments, or institutions and a foreign government.

Canary in the coal mine?

Many federal countries, including Canada, will be watching how Australia’s new foreign policy bill plays out in practice. While Canberra’s action may garner some support beyond its borders, countries should be cautious about following the Australian model as is. For example, Canada’s constitution is much more explicit than Australia’s on the role and scope that provinces (states) can play in international affairs. Canada and Australia also have remarkably different economic relationships with China. While China is Australia’s number one trading partner, accounting for 39 per cent of its exports and 27 per cent of its imports, China accounts for only four per cent and 7 per cent of Canadian exports and imports, respectively. Nevertheless, Australia’s experiences still speak to a need in Canada for a more coordinated Asia strategy between Ottawa and the provinces.