China hits us with a cotton-pickin’ ban

The cotton industry says there is no doubt that China has slapped covert restrictions on producers.

Experts have branded the cotton ban a clear ­violation of world trade laws — as well as a breach of the spirit of the landmark China-Australia Free Trade Agreement.

The cotton industry says there is no doubt that China has slapped covert restrictions on Australian producers by verbally conveying a freeze on orders to up to 14 Australian sellers.

As the Morrison government warned China against taking ­“discriminatory actions” aimed at Australian farmers, experts have branded the cotton ban a clear ­violation of world trade laws — as well as a breach of the spirit of the landmark China-Australia Free Trade Agreement.

China watchers say it is clear that Beijing is now systematically moving to replace Australian exports to the country, undermining recent optimism that the ruling Chinese Communist Party wanted to improve bilateral ties.

Australian Cotton Shippers Association chair Michael O’Reilly said Australian sellers were informed of the informal ban last weekend by Chinese cotton mills and their agents, in what ­ap­pears to be a co-ordinated strategy.

“There are about 14 merchants selling Australian cotton (into China). The message was consistent and overwhelming,” he said.

“They were told that the China National Development and Reform Commission was informing mills verbally not to purchase any more Australian cotton, otherwise their import quota for next year would be wiped.”

The association spent all week confirming the news before going public, noting that inquiries about sales of cotton had ground to a halt since word of the ban broke.

“All this week, I am not aware of a single inquiry out of China for this market,” Mr O’Reilly said.

Normally, Australian cotton is sold into China under an 890,000-tonne, tariff-free quota. After the quota is filled, the tariff then reverts to 40 per cent.

Unlike China’s recent trade bans on Australian beef, barley and wine, Beijing’s targeting of Australian cotton is outside official channels and harder to prove.

The Morrison government will now monitor cotton export volumes to China over the next three months to build a case that it can take to the World Trade ­Organisation in Geneva.

Trade Minister Simon Birmingham warned China that Australia would treat any unauthorised ban “very seriously”.

“China should rule out any use of discriminatory actions against Australian cotton producers,” he said. “­Impeding the ability of producers to compete on a level playing field could ­constitute a potential breach of China’s international under­takings, which would be taken very seriously by Australia.

“Our cotton exporters have worked hard to win contracts and establish themselves as reliable suppliers of high-quality cotton in the Chinese market, which is an important input for many Chinese businesses.”

But despite the shock of the unexpected trade ban, Australian cotton growers were defiant, vowing to sell the fibre to willing buyers elsewhere in Asia.

Cotton Australia chief executive Adam Kay said the Chinese import restrictions would not break the industry. “We are just planting cotton now; it is going to be harvested in five or six months. So our cotton shippers, the people who buy the crop off the farmer and sell it into the spinning mills of Asia — they have got time to work on other countries,” he said.

“Certainly, Vietnam, Indonesia, Bangladesh, Thailand — there are a lot of countries we have a history of selling cotton to, and I’m sure we are going to find a home for that Australian cotton.”

Earlier this year, China warned through its ­ambassador to Australia, Cheng Jingye, that Australia’s call for an independent ­inquiry into the coronavirus pandemic could spark a Chinese boycott of Australian products.

Beijing has since slapped an 80 per cent tariff on Australian barley, banned beef imports from five major Australian meatworks, and opened the door to punitive tariffs on Australian wines.

Perth USAsia Centre research director Jeffrey Wilson said China could legally place a quota on a commodity, but it could not discriminate against Australia in ­applying an import cap.