Australia and China reach breakthrough in trade dispute

Australia and China have reached a breakthrough in their longrunning trade dispute over sanctions worth about $20bn a year.

Australia has reached an agreement with China to resolve trade blockages on barley exports its hopes will be followed by the removal of similar tariffs on wine.

Foreign Minister Penny Wong announced on Tuesday the two nations had reached a partial breakthrough in their longrunning trade dispute over Chinese sanctions on Australian products worth an estimated $20bn a year.

Senator Wong — who is acting prime minister with Anthony Albanese on leave — said China had agreed to undertake an “expedited” review of the tariffs it imposed on Australian barley when relations between the two countries plummeted in 2020.

In return for Beijing’s co-operation, Australia will temporarily suspend its appeal to the World Trade Organisation over the matter, Senator Wong said.

Australia will give China a three-month period in which to review the barley tariffs, with a possible fourth month if required, before it resumes its trade dispute in the WTO if they aren’t removed.

Foreign Minister Penny Wong says Australia has reached an agreement with China to resolve trade blockages. Picture: NCA NewsWire / Naomi Jellicoe

The federal government hopes if the tariffs on barley can be lifted it will then be able to successfully advocate for the removal of similar trade impediments on Australian wine.

Senator Wong confirmed the breakthrough in Adelaide where she spoke to reporters alongside Trade Minister Don Farrell.

“The reason we are going down this path is because the Australian government wants to see these impediments, these tariffs, lifted as soon as possible. That’s the intention,” she said.

“And we believe it’s in China’s interest.”

Senator Farrell is expected to travel to Beijing this year to continue trade negotiations after he attended the first meeting between an Australian trade minister and a Chinese commerce minister in three years in February.

China has agreed to undertake an “expedited” review of the tariffs it imposed on Australian barley when relations between the two countries plummeted in 2020.

He said on Tuesday the Australian government had decided to temporarily suspend its WTO appeal over barley exports as a “sign of goodwill”.

“We are hopeful that at the end of that review process, the impediments that currently exist will be suspended and removed, and we can get back to normal trade with China,” he said.

“China remains our largest trading partner. Last year, we did almost $300 billion worth of trade with China … but we’ve had these trade impediments.”

The agreement to resolve the dispute over the export of barley comes after months of negotiations between Australian and Chinese ministers as well as the countries’ two leaders.

Trade Minister Don Farrell is expected to travel to China. Picture: NCA NewsWire / Naomi Jellicoe

Senator Farrell said in December he wanted Chinese sanctions on Australian exports — which also include meat and crayfish — lifted within a year after meeting with Beijing’s top envoy to Canberra, Xiao Qian.

He said last month he was “very confident” that outstanding trade issues could be solved despite Beijing’s strident criticism of the AUKUS security pact after meeting virtually with Chinese Commerce Minister Wang Wentao in February.

The Australian Prime Minister used his landmark meeting with Xi Jinping on the sidelines of the G20 Summit in Bali in November to urge the Chinese President to end the trade standoff.

The meeting, which ended a six-year diplomatic freeze, was regarded as an initial thawing of tense relations between Canberra and Beijing.

Mr Albanese last week denied reports in Hong Kong media that he had been invited “in principle” to visit Beijing later this year but said he would go if President Xi asked him.

Peter Dutton welcomed the news that tariffs on barley could soon be lifted but said the Beijing-Canberra trading relationship shouldn’t compromise Australian values or security.

“China is an incredibly important trading partner for us and I am very pleased that sanctions are being lifted – they should never have been put on in the first place,” the Opposition Leader told reporters in Brisbane on Tuesday.

Mr Dutton took the opportunity to hail the AUKUS nuclear submarine deal between Australia, the United States and the UK as being in Australia’s “best interest”.

“The West and Western democracies need to stand up together to make sure that peace does prevail in our country,” he said.

“We want peace to continue in our country and no change of status quo in relation to Taiwan, and we will work with China as a valued trading partner to see the jobs and activity continue to flourish but we do not compromise on our values as a country.”

Originally published as Australia and China reach breakthrough in trade dispute