The Chinese Ministry of Commerce has announced a review of its existing anti-dumping and anti-subsidy duties on barley imports from Australia, a major move toward reducing the ongoing trade tensions between the two nations.
(Bloomberg) — The Chinese Ministry of Commerce has announced a review of its existing anti-dumping and anti-subsidy duties on barley imports from Australia, a major move toward reducing the ongoing trade tensions between the two nations.
The ministry gave details of the barley tariff review in a statement on Friday, confirming an earlier announcement from the Australian government on Tuesday. In return for the review, Australia has agreed to temporarily suspend its case against China at the World Trade Organization.
In the Friday statement, the Chinese government said the review would begin on April 15 and would finish within one year. The ministry said the decision had been made in response to a request from the China Alcoholic Drinks Association to end the tariffs and made no mention of a deal with Australia.
The Australian government said this week that the review would be take between three and four months to complete, but there is no mention of that timeline in China’s statement.
Read more: Australia, China Agree on Pathway to End Tariffs on Barley
In its request to the ministry for a review, the association said the curbs are no longer necessary as domestic barley production can’t keep up with demand and the cost pressures on beer manufacturers have increased following the war in Ukraine and global trade disruptions. Imports are China’s main source of barley, with Australia previously accounting for 60%-70% of the market, the association’s statement said.
“This allows both sides a path away from confrontation without needing to admit fault – with China using the investigation period to conclude that their prior concerns have been resolved, and Australia regaining market access at normal terms of trade, which is on the whole a better outcome for farmers than a WTO victory,” said Even Pay, agriculture analyst at Trivium China, a policy research consultancy in Beijing.
“It’s in line with both countries’ efforts to reset the bilateral relationship, which have been underway since the Albanese government took over last year. I expect that effort will continue throughout the year as long as the two countries can avoid any major diplomatic flash-points,” she said.
Beijing had originally imposed tariffs and other import blocks in 2020 on a range of Australian exports, including barley, wine and coal, in the wake of calls by then-Prime Minister Scott Morrison for an international investigation into the origins of Covid-19. Relations had been worsening even before that and plummeted after the comments by Morrison and the then foreign minister.
However, the soaring price of iron ore has meant that the value of Australia’s exports to China have continued to be high despite Beijing’s sanctions on some goods, and farmers and miners were able to divert some of the goods to other markets.
Despite the Chinese tariffs, Australia shipped huge volumes of barley in 2022–23, with the value of exports reaching a record A$3.7 billion ($2.5 billion), according to the government, with much of the trade redirected to Saudi Arabia. Despite the loss of access to the higher-value Chinese market, export prices for Australian barley have remained high due to tight global coarse grain supply.
Wine producers were not so lucky, with the Chinese tariffs of more than 200% effectively closing access to what previously had been the most lucrative export market. However since the election of the center-left Labor government in Australia in May, bilateral relations have improved, and Trade Minister Don Farrell is expected to travel to Beijing to meet with Minister for Commerce Wang Wentao by the end of May.
–With assistance from Hallie Gu and Jasmine Ng.
(Updates throughout with more details.)
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