China has fired its first shot in an increasingly bitter diplomatic row, threatening to slap major tariffs on Australia’s barley exports, that could rip hundreds of millions of dollars from the trade.
Relations between Canberra and Beijing have hit a fresh low in the wake of the COVID-19 pandemic, as Prime Minister Scott Morrison lobbies his counterparts for an international inquiry into the origins of the virus.
China’s Ambassador to Australia Cheng Jingye had previously threatened his country would impose economic sanctions if Mr Morrison continued to push for the probe, in what Trade Minister Simon Birmingham described as “coercion”.
Now, it appears China is set to make good on those threats and the first victims could be Australian barley growers.
Several major Australian grain groups have issued a joint statement today saying the industry understands China is “potentially proposing to place tariffs on barley imported from Australia as a result of their ongoing anti-dumping and countervailing duties investigation”.
“The yet-to-be-finalised tariffs may include a dumping margin of up to 73.6 per cent and a subsidy margin of up to 6.9 per cent for barley imported from Australia,” it said.
The subsidy claims are understood to refer to Australia’s fuel rebate and drought support measures, and together with the dumping tariff would effectively put an end to Australia’s barley trade with China.
Government sources suggest the investigation could be used as a cover to impose the tariffs, in retaliation against Australia’s push for the COVID-19 inquiry.
Valuable trade at stake
Grain Producers Australian chairman Andrew Wiedemann described the tariffs as “absolutely a massive kick in the guts” to Australia and one he believed would resonate “right through the community right down to the consumer to every part of Australian society”.
Typically, at least half of Australia’s barely exports would be bound for China, in an annual trade that was estimated to be worth $1.5 billion in 2018 but due to drought fell to $600 million in 2019.
Barley is considered one of Australia’s top three agriculture exports to China but since 2018 has been at the centre of dumping allegations.
Mr Weidemann believed Australia had answered those allegations, before the World Trade Organisation, and said the Australian industry had not expected China would effectively announce an end to the barley trade.
“Barely has been traded into China recently, even though we’ve had the dumping allegation on the record.
“In the last six months we know there’s been shipments and there’s been indications of further business required, so this decision came unexpectedly given we felt we had answered all of the questions as an industry back to China,” Mr Weidemann said.
“We also know that China really does want our barley, they’ve been a substantial buyer of our barley for a long time, so this also will cause damage to their own industry.”
Mr Weidemann said the grains industry was waiting for an impact statement issued by China to be translated from Mandarin to understand China’s claims ahead of a final determination on the tariffs, expected by May 19.
Birmingham: ‘We do not accept’
Trade Minister Simon Birmingham said the Australian Government was deeply concerned by reports of “unjustified duties levied on Australian barley imports into China” and that Australia would defend the interests of its barley growers.
In a statement, Mr Birmingham said the Government had worked with the Australian barley industry to put the case against China’s anti-dumping investigation.
“We will use the remaining time before China finalises its decision to continue our efforts to resolve this matter satisfactorily and will seek to uphold the integrity of our world-leading barley producers,” the statement said.
“We do not accept that there is a prima facie case, let alone a conclusive case, to find dumping by or subsidy of Australian producers.”