China to Drop Anti-Dumping Tariffs on Australian Barley

Last updated on August 5th, 2023 at 02:58 pm

Anti-dumping and anti-subsidy levies on Australian barley imports have been lifted, according to China’s Ministry of Commerce, a significant step toward improving tense relations between the two countries. The three-year-old tariffs, to the tune of billions of dollars, have negatively damaged trade between China and Australia.

The choice comes after the two nations resolved their disagreement about barley imports in April. Canberra consented to suspend a World Trade Organization (WTO) action involving Beijing’s anti-dumping and countervailing charges on barley as part of the deal. China promised to hasten the review of the levies in return.

The Chinese Ministry of Commerce will end the tariffs this coming Saturday, citing a shift in the barley market in China. However, precise information about market changes has not been offered.

The removal of tariffs is anticipated to benefit Australian farmers and barley prices. Dennis Voznesenski, a senior grains expert at Rabobank, said that malt-quality barley, in particular, would likely command a premium over current costs. However, he warned that certain market participants transporting barley to China would choose to pay more owing to worries about potential China decision reversals.

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This development also draws attention to other Australian goods still subject to Chinese import restrictions, such as wine, which is also subject to taxes and unofficial limitations on importing lobster and meat from particular abattoirs. Ministers from Australia stressed the value of the WTO dispute mechanism in protecting the interests of their nation’s farmers and producers, and they stated their hope that a similar procedure would be used to eliminate the levies on Australian wine.

Australia’s request for an investigation into the causes of COVID-19 served as the catalyst for the worsening relations between China and Australia in 2020. Beijing retaliated by placing anti-dumping levies on Australian wine and barley as one of its measures. The largest beer market in the world, valued up to A$2 billion ($1.31 billion) yearly, was considerably impacted by China’s implementation of tariffs totalling 80.5% on Australian barley in May 2020. Australia subsequently lodged a formal protest with the WTO in December of the same year, and a related dispute on wine tariffs is still pending.

However, since the centre-left Labor Party took over in Australia, tensions between the two key commodity trading partners have been reducing. After an almost three-year break, Chinese purchases of Australian coal restarted in January, and Beijing confirmed in May that imports of Australian lumber would also resume.

There is optimism that the recent barley ruling may serve as a precedent for eliminating import taxes on Australian wine. When the fresh crop is harvested in October and arrives by year’s end, it is anticipated that Chinese consumers will again turn to Australian supply, changing the dynamics of the barley market. The Australian Grain Producers applaud the decision and regard it as a victory for local exporters, Chinese customers, and the Chinese economy.

Overall, removing the duties on Australian barley marks a promising breakthrough in China and Australia’s economic relations and opens the door for further settlement of other contentious products.