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Belt and Road

Australia nixes state Belt and Road deals with China in first veto

Morrison government uses new powers amid concerns over Beijing's influence

In better days: Staff members chat at a Beijing venue as they prepare a seminar of Australia-China bilateral cooperation in resources and infrastructure in Western  Australia.    © Reuters

SYDNEY -- The Australian government on Wednesday said it will cancel agreements between the state of Victoria and China regarding cooperation with Beijing's Belt and Road infrastructure initiative in a move likely to stoke tensions between the two nations.

This marks the first time that a decision was made to cancel a deal under a law enacted in December, according to the federal government. That law grants the foreign minister the authority to nullify an agreement struck between a local government in Australia and another country if such a deal goes against the federal government's foreign policy.

Foreign Minister Marise Payne said that four documents signed by the southeastern state of Victoria will be canceled.

"I consider these four arrangements to be inconsistent with Australia's foreign policy or adverse to our foreign relations in line with the relevant test in Australia's Foreign Relations (State and Territory Arrangements) Act 2020," Payne said in a statement.

Two of those -- a 2018 memorandum of understanding and a 2019 agreement on the Belt and Road Initiative -- were signed with the National Development and Reform Commission, China's top economic planning body.

Australian Foreign Minister Marise Payne said that four deals signed by the southeastern state of Victoria will be canceled.   © AP

Another is a 1999 agreement on education signed with Syria, and the last one is a 2004 memorandum of understanding with Iran on job training.

Victoria -- led by the Labor Party, an opposition party at the national level -- signed the 2018 memorandum on its own with China. Prime Minister Scott Morrison of the Liberal Party publicly expressed dissatisfaction with the deal.

The granting of veto powers to the foreign minister last year came in response to growing concerns in Australia that China was trying to exert influence through its investments. In particular, some took issue with how Beijing was growing close to local governments.

Relations between Canberra and Beijing have soured. After Morrison last April called for an independent probe into the origin of COVID-19, China retaliated by suspending some imports of Australian meat and imposing high tariffs on barley and wine.

Australia brought the issue to the World Trade Organization in December, arguing that the additional duties on barley were inconsistent with WTO rules. The latest move by Australia is likely to cause tensions to rise further.

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