China Ends Tariffs on Australian Barley Imports

From August 5, China will eliminate import tariffs on Australian barley, marking the latest development in the improving relations between the two nations.

China has announced the removal of its longstanding tariffs on Australian barley imports, signalling a potential warming of relations between the two nations. This move, affecting billions of dollars worth of trade, has been met with praise from Australia’s Prime Minister, Anthony Albanese.

The announcement follows three years of trade tensions that peaked with Beijing imposing tariffs on key Australian exports, including barley, beef, and wine.

In a statement, China’s Ministry of Commerce clarified that the tariffs would cease as of Saturday. The Ministry cited changes in China’s barley market as the reason, explaining that it is no longer necessary to continue to impose anti-dumping duties and countervailing duties on imported barley from Australia.

The decision may alleviate the financial stress felt by Australia’s farming sector, particularly given that barley exports to China were estimated to average around A$1.2 billion ($790 million) annually before the tariffs’ imposition.

The lifting of tariffs also brings implications for the global trade landscape. Australia has responded by suspending its case at the World Trade Organization (WTO) concerning Beijing’s duties on barley. This step back from litigation could indicate the early stages of a more harmonious trade relationship between the two nations, further signaled by Australia’s recent invitation for China’s new foreign minister to visit the country.

However, while progress has been made on the barley front, Canberra is still pushing for Beijing to lift tariffs on other Australian exports. Among them, the Australian wine industry remains significantly affected. In 2020, China imposed heavy tariffs on Australian wine exports, severing what was previously its most lucrative market. Australia has lodged a separate complaint with the WTO regarding this issue.

Relations betweenn the two countries have improved since 2020

The China-Australia relationship soured in 2020, when then-Prime Minister Scott Morrison called for an international investigation into the origins of Covid-19. However, with the election of the centre-left Labor government in May 2022, communication channels between the two nations have reopened, and the relationship has shown signs of improvement.

Significant impact, say industry experts

The removal of tariffs on Australian barley may significantly impact market prices according to industry experts. Dennis Voznesenski, a senior grains analyst at Rabobank, shared his insights on the potential outcomes. He was quoted by Reuters as saying that this decision could prove beneficial for Australian barley prices and especially advantageous for farmers with malt quality barley, who might command a premium over recent prices.

Voznesenski also expressed some caution, indicating that market players shipping barley to China might seek a premium due to the inherent risks. He explained, ‘There are going to be some concerns if, for example, China goes back on its decision.’ This remark highlights the delicate nature of the trading relationship and underscores the necessity for continued positive dialogue between the two nations.

Welcome news for Australian farmers

Australia’s National Farmers’ Federation chief executrive, Tony Mahar, was quoted by The Guardian as saying: “Scrapping these tariffs is welcome news for some 23,000 Australian grain producers who have been impacted by the tariffs imposed in 2020.”

In conclusion, China’s decision to drop tariffs on Australian barley marks a significant development in the bilateral relationship. While the future of Australian wine and other exports remains uncertain, the move signifies a positive step towards mending ties and reviving trade relations. As the world watches, it is hoped that this trend continues, supporting a stable and prosperous partnership between China and Australia.