Breakthrough in China-Australia trade dispute

Chinese trade sanctions on Australian barley could soon be lifted after Beijing agreed to undergo an ‘expedited review’, acting PM Penny Wong has announced.

Acting Prime Minister Penny Wong, and Trade and Tourism minister Don Farrell in Adelaide on Tuesday. Picture: NCA NewsWire / Naomi Jellicoe

Australia will temporarily suspend its World Trade Organisation action and give Beijing four months to lift its ban on barley exports in a sign of stabilising relations coinciding with the arrival of high-level Chinese official Ma Zhaoxu.

Mr Ma, China’s Executive Vice-Minister for Foreign Affairs and a former ambassador to Australia, will meet with Department of Foreign Affairs secretary Jan Adams in Canberra on Wednesday.

The government’s announcement on barley is aimed at fast-tracking a resolution in a test case that could provide a template for the removal of Chinese sanctions on other goods, including wine, as both nations work towards the removal of trade restrictions on $20bn worth of Australian exports.

Acting Prime Minister and Foreign Minister Penny Wong said the WTO suspension would allow China up to four months to conduct a review into the tariffs imposed on Australian barley, which could provide for a “significantly shorter timeframe for resolution of this dispute”.

“Obviously, if the duties are not lifted at the end of the review period, we will resume our dispute in the WTO,” Senator Wong said.

“If this agreement is successful in providing a pathway for the lifting of duties on barley, the Australian government would expect a similar process to be followed in relation to the trade barriers which exist on Australian wine.”

Beijing imposed duties on Australian barley of 80.5 per cent in 2020, effectively shutting off the Chinese market, which accounted for about 60 per cent of our barley exports.

Annual trade flows were worth about $1.2bn and exports to China peaked in 2016-17 at 6.3 million tonnes.

Markets in Saudi Arabia, Thailand and Vietnam grew, while China’s main suppliers of barley after the tariff were Canada, France and Argentina. .

Most of Australia’s exported barley comes from Western Australia and South Australia.

Trade Minister Don Farrell said about $20bn worth of Australian trade had been subject to restrictions and he was hopeful the new agreement offered a pathway to “get back to normal trade with China”.

“China remains our largest trading partner. Last year, we did almost $300bn worth of trade with China,” Senator Farrell said. “That’s more than all of our trade with the US, with the United Kingdom, with Japan, with Korea and with France. So it’s an extremely bigmarket, but we have had these trade impediments.”

He said the agreement was struck following a virtual meeting with his Chinese counterpart, Wang Wentao, with Senator Farrell having long flagged his preference for a bilateral deal to bypass the WTO process that had the potential to drag on for another two years.

 

The potential breakthrough on barley comes as the Albanese government seeks to stabilise diplomatic ties with Beijing, with Mr Ma holding meetings in Canberra on Wednesday.

­Anthony Albanese is also hopeful of visiting China later this year to mark the 50th anniversary of Gough Whitlam’s 1973 trip — the first by an Australian prime minister.

Grain farmers on Tuesday also welcomed the prospect of a resolution that could bring Australia’s largest barley export market back online. Grain Producers Australia chairman Barry Large, who has a farm on the northern Western Australia wheatbelt, said barley was “an important rotation crop for Australian growers and any optimism on the future outlook is good”.

“This process to reach a resolution would be significantly shorter than if the WTO process continued,” he said.

“We welcome the Labor government’s constructive dialogue and positive progress towards stabilising the relationship with China, and creating this process and opportunity to recommence the barley trade.”

Grain producers are looking forward to politics being taken out of their industry and some producers are already beginning to think about increasing the size of their barley crops now that China appears to be open for business once more.

GrainGrowers chairman Rhys Turton, who grows barley on his property near York in WA, said a resolution was in the best interests of both countries.

“This is a step in the right direction for trade between our two countries and highlights the value of the WTO process to encourage mechanisms for bilateral dispute resolution,” Mr Turton said.

Grain Trade Australia chief executive Pat O’Shannassy, whose organisation facilitates efficient trade along the grain supply chain, said he was hoping that the process would enable exports to resume.

“China was historically a very important export market for barley from Australia over many decades, with very strong customer relationships and considerable co-operation between industry partners in plant breeding and technical support to meet China’s needs,” Mr O’Shannassy said.

Opposition trade spokesman Kevin Hogan and opposition foreign affairs spokesman Simon Birmingham said the value of the process set out by the government would be “judged on the outcomes achieved”.

“That outcome should be the complete and unconditional removal of tariffs on Australian barley and wine – tariffs which should never have been imposed in the first place,” they said.