On August 4, China announced that it would lift the anti-dumping and anti-subsidy tariffs on Australian barley, ending a three-year restriction that led to a significant reduction in trade between the two countries. This decision has prompted Australia to call for the end of all remaining trade restrictions, especially those on wine, as the relationship between the two trading partners shows signs of normalization.
China’s decision to remove the barley tariffs comes after the resumption of trade in other products such as coal and timber. It puts the spotlight on the few remaining Australian products still facing restrictions, including wine, which is also subject to tariffs, and unofficial limitations on lobster and meat exports from certain abattoirs.
Australian Trade Minister Don Farrell stated that Chinese restrictions affecting approximately A$20 billion of annual trade in May 2020 have now reduced to affecting about A$2 billion of exports. Farrell aims to use the process of resolving the barley issue as a template to address the ongoing wine dispute and resolve all outstanding issues between the two nations.
The removal of barley tariffs is seen as a positive step
The trade relationship between Australia and China deteriorated in 2020 after Australia called for an inquiry into the origins of COVID-19. This led to reprisals from China, including the imposition of anti-dumping duties on Australian wine and barley. However, tensions have eased since the Labor party took power in Australia last year, with Chinese purchases of Australian coal and timber resuming this year.
The removal of barley tariffs is seen as a positive step, with the potential to benefit the Australian wine trade. Australia’s wine trade with China was previously worth A$1.2 billion annually. Shares of wine producer Treasury Wine Estate rose after the announcement.
The barley tariff drop is likely to positively impact Australian barley prices and farmers. With China’s demand for malt quality barley and the upcoming Australian crop harvest in October, there are expectations of increased purchases by Chinese buyers.
While the removal of barley tariffs is a positive development, Australia has not yet withdrawn a separate complaint against China’s tariffs on Australian wine, which can be as high as 218%.