(Bloomberg) -- Prime Minister Scott Morrison has new powers to veto or scrap agreements that state governments reach with foreign powers under laws that could stymie China’s Belt and Road Initiative in Australia and further inflame tensions between the trading partners.
The laws passed by Parliament on Tuesday will give the foreign minister the ability to stop new and previously signed agreements between overseas governments and Australia’s eight states and territories, and with bodies such as local authorities and universities.
Morrison’s government will be able to block or curtail foreign involvement in a broad range of sectors such as infrastructure, trade cooperation, tourism, cultural collaboration, science, health and education, including university research partnerships. An early target is likely to be an agreement the Victoria state government signed in 2018 to join President Xi Jinping’s signature infrastructure-building BRI.
The laws could further worsen ties between Australia and its largest trading partner, which have been in free fall since April, when the prime minister called for an independent probe into the origins of the coronavirus. Beijing has since inflicted a range of trade reprisals, including imposing crippling tariffs on Australian barley and wine while blocking coal shipments.
Relations hit a fresh low last week when a Chinese diplomat tweeted an image purporting to show an Australian soldier holding a knife to the throat of an Afghan child. After Morrison called for an apology for the “repugnant” post, a senior Chinese Foreign Ministry official dismissed the demand, questioning whether the Australian leader “lacks a sense of right and wrong.”
Victoria Premier Daniel Andrews told reporters last week that his government wasn’t considering withdrawing from its BRI agreement due to the worsening ties, the Australian Associated Press reported.
China’s cooperation with Victoria on BRI has brought benefits to both sides, Chinese Foreign Ministry spokesman Zhao Lijian said in August. “Australia should have an objective view of such cooperation and BRI, and not set up impediments for China-Australia cooperation.”
Beyond the BRI deal signed by Victoria, which aims to increase Chinese participation in new infrastructure projects, the law may allow the federal government to review and overturn memorandums of understanding between Beijing and the governments of Western Australia, South Australia and Tasmania in sectors ranging from investment, science cooperation and access to the Antarctic.
The states and territories have at least 130 agreements across 30 nations that could be affected by the new law, according to Morrison. The law will establish a public register to provide transparency to the foreign minister’s decisions and states and territories will be given three months to deliver a stock-take of their existing agreements.
Partnerships between Australian universities and Beijing-sponsored bodies could be scrapped. There is mounting concern in intelligence circles about China’s influence in universities, and a program under which academics sign over intellectual property rights to their work in return for research grants, the Australian newspaper reported in April.
Under the law, Morrison won’t be able to scrap deals between state governments and commercial companies or state-owned enterprises. That means the lease of a strategic port in Darwin, used by the U.S. military, to a Chinese company by the Northern Territory government in 2015 could not be overturned.
It’s the latest move by the government to safeguard national interests. Morrison also plans to toughen foreign investment screening, regardless of the size of the deal, for sectors such as telecommunications, energy and technology.
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