China reviews tariffs on $20bn in trade as Macka’s Australian Black Angus Beef signs with Sichuan

Hope is rising that China could remove tariffs on trade worth $20bn annually as one NSW operator signs a deal to supply black Angus beef to Sichuan province once relations improve.

NSW beef farmer Robert Mackenzie (centre) met with officials from Sichuan, who had flown to Australia over the Easter weekend to inspect his farms. Picture: Supplied

Hopes is rising that disputes over Chinese trade worth $20bn annually could be resolved, with Beijing agreeing to review its tariffs on barley and a new “strategic co-operation” deal signed for NSW farm operator Macka’s Australian Black Angus Beef to sell beef to Sichuan province.

Shares in Australia’s largest wine company, Treasury Wine Estate, rose by 56c or 4.26 per cent to $13.7 on Tuesday amid increased confidence that China’s tariffs on Australian wine of more than 200 per cent could be lifted, following an agreement by China to review its tariffs on Australian barley.

The winemaker welcomed the barley review, saying it looked forward to a stronger relationship between the two countries.

Meanwhile, Macka’s chief executive Robert Mackenzie said officials from Sichuan had flown to Australia over the Easter weekend to inspect his farms.

Macka’s exports of high-quality meat were hit by a Chinese ban on several of Australia’s largest abattoirs in 2020.

Mr Mackenzie said the agreement signed over the weekend would see his farms supply black Angus beef to Sichuan once trade relations between the two countries improved. “The vibe we have been getting from our customers in China is positive and strong,” he said.

“It was a positive sign that these officials flew to Australia to meet us.

“It gives us confidence that we will hear in the near future that the trade sanctions (against Australian abattoirs) will be lifted.”

Amid increasing political tensions between Australia and China, official and unofficial trade measures were imposed on some $20bn in Australian exports, including barley, wine, some beef products, coal, timber and lobsters, since 2018.

The agreement for a reassessment of barley duties – hailed by Foreign Affairs Minister Penny Wong and Trade Minister Don Farrell as a “step forward” to resolving the dispute – will see ­Australia temporarily suspend its complaint before the World Trade Organisation, while China conducts an “expedited review” of tariffs over the next three months.

Announcing the agreement – which comes as Chinese Deputy Foreign Minister Ma Zhaoxu is visiting Australia this week – the ministers said they also remained “confident” of a positive outcome for Australia’s complaint against Chinese tariffs on wine, which is also being heard by the World Trade Organisation.

“If the agreement is successful in providing a pathway for lifting duties on barley, we expect a similar process to be followed to remove trade barriers for Australian wine,” they said.

Australian exports of coal to China, another commodity hit by unofficial trade bans from China over the past few years, resumed in January, amid reports that all bans on Australian coal exports have now been lifted.

Industry officials in the barley and wine sectors, where Australia has lodged formal complaints with the WTO, were still cautious about declaring a resolution of the tariff disputes, which emerged as political relationships between China and Australia deteriorated.

GrainGrowers chair Rhys Turton described the announcement that China would review its tariffs on Australian barley – a trade once worth between 60 and 70 per cent of Australian barley exports, peaking at more than $900m in 2018-19 – as a “step in the right direction for trade between our two countries”.

He said the move “highlights the value of the WTO process to encourage mechanisms for bilateral dispute resolution”.

But the agreement could still see the issue go back to the WTO if China does not remove its duties on barley.

Australian wine sales to China, which peaked at more than $1.2bn before tariffs were introduced in late 2020 and formalised at levels of more than 200 per cent in March 2021, have collapsed to only $12m last year.

A Treasury Wine Estates’ spokesperson said the company welcomed “any move that strengthens economic and cultural ties between Australia and China, including the announcement of a review of duties on ­barley.”

“We look forward to continuing to work with the Australian government and the broader business community to deepen bilateral trade relationships and build on the complementarities between our two nations over the long term,” they said.

Lee McLean, the chief executive of wine industry body, Australian Grape and Wine, said the WTO hearing process on Australia’s complaint about China’s tariffs on Australian wine was about three to six months behind the WTO process on barley.

“We are watching the barley dispute very closely to see how it will play out,” he told the Australian.

“It has been really positive over the last few months to see the improvement in relations at a political level.

“We are hoping that what has been proposed in relation to barley could provide the right template for a resolution in the case of wine,” he said.

He said there was no time­frame for the WTO hearing on Australian wine but he expected to see a draft report handed down in the second half of the year.

The director of the Australia China Relations Institute at UTS in Sydney, Mr James Laurenceson, said the announcement on barley was a “repudiation of the line that Beijing doesn’t care about international (trade) rules”.

“There’s still a way to go, but all the signs are that it is rules and diplomacy which will deliver a resolution for Australia’s farmers,” he said.

“Australia’s winemakers will be feeling a bit more upbeat today too.”

Mr Mackenzie, who was exporting beef to customers in Shanghai before the bans on the northern NSW abattoir he used to export to China, said he had kept in contact with his Chinese customers in the past few years in the hope of resuming trade.

He said he had been contacted two weeks ago by the officials from Sichuan province, saying they wanted to visit his farm.

He said the visit saw officials ask detailed questions about biosecurity and the traceability of his beef.

“I believe we will start to see more Chinese delegations coming from China to see meat suppliers in Australia,” he said.

“It is an exciting time for the industry and for our family ­business.”

“Customers in China who had been buying Australian beef in the past are very eager to resume the trade as soon as possible.”

Mr Mackenzie, who had visited China 16 times before the Covid-19 travel shutdowns, said he would visit China once the beef trade resumed.