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Australia prepares to take China to the World Trade Organisation
By Eryk Bagshaw
Australia is preparing to take China to the World Trade Organisation if it does not reverse its decision to impose tariffs on up to $1 billion in barley exports.
Government sources with knowledge of the developments said Australia would prefer to avoid protracted negotiations at the global trade body, but would be left with little choice if China did not retract its decision to impose tariffs of up to 80 per cent on the Australian crop.
The sharp escalation in trade tensions follows Australia's push for an independent global inquiry into the origins of the coronavirus. China approved the import of barley from the United States last week as part of phase one of a deal designed to put an end to a two-year trade war between the two superpowers.
In a sign of growing frustration within the Morrison government, Trade Minister Simon Birmingham said he could understand why people would draw the link between Australia's pursuit of a global inquiry and the sudden imposition of the tariffs.
Senator Birmingham has previously urged Australians to interpret them as two distinct issues.
"China denies there's a link," he said. "The only thing we can do in defence of our farmers is engage in the process as constructively as we can."
'Deeply disappointed' ... Trade Minister Simon Birmingham.Credit: AAP
China's embassy in Canberra on Tuesday denied Australia had any influence on the global coronavirus inquiry, saying the draft resolution to be adopted by the World Health Assembly on Tuesday was "totally different from Australia's proposal of an independent international review".
"To claim the WHA's resolution [is] a vindication of Australia's call is nothing but a joke," it said in a statement on Tuesday.
China's decision to impose the tariffs over dumping allegations effectively wipes out barley trade between the two countries as China looks to increase purchases from eastern Europe, the US and Canada. The crop is used to make beer and feed livestock.
Australia has submitted more than 10,000 pages of evidence to China in relation to the dispute. China argues Australian barley farmers are subsidised - including through drought relief - giving them an unfair advantage against China's local producers by allowing them to dump cheaper barley into the market. Australian trade negotiators have rejected the allegations and will argue Australian barley farmers operate on commercial terms.
IBISWorld senior industry analyst William Chapman said China is Australia's single largest export market for grain.
"While China's recovery from the COVID-19 outbreak has supported the demand for locally grown barley in recent months, American farmers, rather than Australian ones, are likely to benefit," he said.
Senator Birmingham said Australia reserved its right to pursue WTO action. Trade disputes can take years to resolve at the global authority.
"There may be other paths that we choose to pursue first," he said. "It's entirely within China's rights to withdraw these duties, just as they've imposed these duties. I hope that they will see common sense."
Agriculture Minister David Littleproud said earlier on Tuesday that Australia would "probably" go to the WTO to make a determination as an independent umpire.
Mr Littleproud said Australia should be proud of its push for a global coronavirus investigation.
"The fact that Australia led the way and asked ... for that review to take place, we should be damn proud as a nation that we led the world in not only on understanding what the WHO has done, but understanding what wildlife wet markets' role is in these pandemics," he said.
The motion to establish an independent inquiry into COVID-19 is expected to pass the World Health Assembly on Tuesday night after the European Union and Australia secured the support of more than 120 other countries.