Chinese and Australian officials will spend their days, and probably nights, this week in another round of talks to advance the proposed free-trade agreement between the two countries. These talks, to be held in Canberra, will focus in part on agriculture. Discussions will no doubt touch on the future of Australian wheat exports to mainland China. The Chinese will be anxious to know more about the fallout from the latest political soap opera in Australia - a judicial inquiry into the role of the AWB in the Iraqi oil-for-food scandal. The AWB is the monopoly exporter of Australia's wheat crop, which is worth about A$3.5 billion ($20 billion) a year. China's share of that market has grown strongly over the past four years, from only 38,000 tonnes in 2002-2003 to 1.8 million tonnes in 2004-2005 - around 12 per cent of the total Australian wheat crop. In short, for both China and Australia, wheat is an important commodity. The AWB has made a number of announcements in the past three years about large contracts it has secured with the China National Cereals, Oils and Foodstuffs Corporation, the sole import agent for wheat in China. The board has been keen to boost its presence in the mainland market, given that the Chinese consume more than 100 million tonnes of wheat annually, making it the largest market in the world. The board has been dealing with China since 1961, when - although Canberra then did not recognise the mainland - it exported 750,000 tonnes of wheat. But Beijing will need to get used to the idea that, despite this long history, it is highly unlikely that the AWB will continue to be the sole source of Australian wheat bound for China. That's because the government is under pressure to strip the AWB of its selling and marketing monopoly, as a result of the revelations about its payment of kickbacks to deposed Iraqi dictator Saddam Hussein's regime. Under the United Nations' oil-for-food programme, Iraq was allowed to sell oil to pay for imports of wheat. Australia exported about 8 million tonnes of wheat under that programme. But an inquiry, under way in Sydney into the AWB's role in the scandal, is revealing that Australia's wheat exporter paid around A$280 million in kickbacks to Hussein's regime between 1999 and 2003. It is expected to recommend criminal charges against key individuals involved. The board's role in the scandal is taking its toll. Last week, the Iraqi Grain Board announced that it was suspending dealings with the AWB, which would not be allowed to participate in a tender for 1 million tonnes of wheat. That decision could be just the beginning of the setbacks facing the AWB. Last week, a group of members of parliament from Prime Minister John Howard's own Liberal-National coalition began a concerted lobbying campaign to abolish the AWB monopoly. Mr Howard and his agriculture minister, Peter McGuaran, have indicated that they will look at ways to meet that demand. It is likely that, instead of one board, there will be a number of exporters to which Australia's 36,000 wheat farmers could sell their product. From Beijing's perspective, dealing with the AWB exclusively might become problematic, given that the organisation is being so badly tainted by its actions in Iraq. If the Australian government moves quickly to end the AWB's export monopoly, that would remove one potential headache from the ongoing trade talks between the two countries. Greg Barns is a political commentator in Australia and a former Australian government adviser
