China drops tariffs against Australian barley

Singapore: China has dropped its tariffs against Australian barley, putting an end to a three-year dispute that went to the World Trade Organisation and helped relations between Beijing and Canberra to fall to historic lows.

The decision opens the door to further relief from $20 billion in trade sanctions as Australian officials target crippling tariffs on Australian wine that have blocked winemakers from their most profitable market for more than two years.

Barley is mainly used in animal feed and beer production in China.Credit: Bloomberg

On Friday, China’s Commerce Ministry said it had decided to end tariffs of up to 80 per cent on the $1 billion trade after a request from the China Wine Industry Association, which represents various alcohol segments.

“In view of the changes in China’s barley market, it is no longer necessary to continue to impose anti-dumping duties and countervailing duties on imported barley from Australia,” the ministry said.

Prime Minister Anthony Albanese said the decision was a good outcome after months of negotiation with Chinese officials.

“One in four Australian jobs is about trade. I have said very clearly on China that we will co-operate where we can, we will disagree where we must, but we’ll engage in our national interest.”

Trade Minister Don Farrell said he believed the case would set a precedent for the remaining restrictions on Australian exports to be removed.

“It’s another very positive step in the full resumption of normal trade between Australia and China,” he said.

Barley, which is mainly used in animal feed and beer production in China, is the second Australian export to have restrictions removed by the Chinese government after more than three years of diplomatic hostility over national security, human rights and COVID-19.

Beijing froze ministerial contact and imposed billions of dollars in tariffs across half-a-dozen industries at the height of its diplomatic disputes with Canberra.

But the sanctions had little impact on Australian government policy with both Liberal and Labor governments maintaining a largely bipartisan consensus on national security and human rights despite differences in tone.

The Australian exports also quickly found other markets and China’s power generators, seafood suppliers and manufacturers suffered from having to use lower quality and more expensive products.

The Productivity Commission said in July that the impact of China’s trade sanctions reduced the total value of Australian exports to the world by just 0.2 per cent as producers diversified their exports to other countries.

Foreign Affairs Minister Penny Wong said barley was one of several exports that found a diversified market in the volatile period.

“In fact, barley producers have increased their exports to the rest of the world during this period from $400 million to $3 billion, an increase of in excess of 600 per cent,” she said.

Grain Producers Australia chairman Barry Large said the resolution of the case would allow Australian producers to recommence selling and exporting our high-quality barley to China.

“While other export markets have purchased Australian barley over the past two years, and trade for other important Australian grains such as wheat have continued with China, growers will look forward to the added opportunity this reopening of the barley trade delivers,” he said.

Australian coal returned to China in February after Chinese regulators issued verbal instructions to importers in 2020 to stop buying $14 billion worth of coal. The ban backfired and hit Chinese power generators last year as the economy reeled from ongoing power cuts.

Relations with Beijing have stabilised since Labor came to government last year but restrictions on wine, lobsters, beef and cotton remain in place. Farrell said the total value of exports that remained affected has now been reduced to about $2 billion. “It’s very significant progress in that 15 months,” he said.

Beijing has maintained the restrictions were due to pests, labelling and concerns over dumping. Those claims were disputed by the former Liberal government, which accused it of economic coercion.

Former trade minister Simon Birmingham took China to the World Trade Organisation over the barley tariffs in December 2020 and his successor Dan Tehan lodged a complaint over tariffs of up to 200 per cent on Australian wine in June 2021.

Farrell said Australia had made it clear to China that it preferred to resolve the disputes through dialogue.

But the WTO case, which China was expected to lose, gave Canberra leverage in discussions with Chinese ministers once high-level diplomatic contact resumed last year.

Wong said Australia was now confident of winning the wine case.

“We have a dispute before the WTO in relation to wine. We are confident of our case. We retain our view, which we have expressed publicly and to the Chinese officials, that it is in the interest of both countries for these impediments to be removed,” she said.

Wong said the removal of the tariffs on barley was a positive development but would not give a firm commitment to a visit by Albanese to Beijing later this year.

“What I would say is the prime minister has made clear he would welcome a visit, and we hope we can continue on the positive path that we are on,” she said.

Detained Australian journalist Cheng Lei has not been allowed to speak with her children who live in Melbourne.Credit: CGTN

Two Australians, Cheng Lei and Yang Hengjun remain behind bars in Beijing on unspecified national security charges. Their families have urged the government to continue raising their cases with Chinese authorities at every opportunity.

“In relation to Cheng Lei, we share the concerns of her family and friends and the continued delays in her case. We are approaching three years of detention,” Wong said.

“We are also concerned for Dr Yang. We will continue to advocate at all levels for Cheng Lei and Dr Yang to be reunited with their families.”

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