Australia threatens China with WTO challenge over barley tariffs

Australia has threatened to appeal to the World Trade Organization following Beijing’s announcement that it will slap punitive tariffs on its barley exports, but has denied it is in a “trade war” with its largest trade partner.

The stand-off follows rising tensions over Canberra’s call for an inquiry into the origins of the coronavirus.

Simon Birmingham, Australia’s trade minister, said on Tuesday he was “deeply disappointed” by Beijing’s decision to impose duties of up to 80 per cent on barley produced in Australia for up to five years — a move farmers said could cripple an A$2bn ($1.3bn) a year industry.

“We reserve all rights to appeal this matter further and are confident that Australian farmers are among the most productive in the world, who operate without government subsidy of prices,” said Mr Birmingham.

“Australia is not interested in a trade war. We don’t pursue our trade policies on a tit-for-tat basis.”

Mr Birmingham said China had made errors in fact and law in the application of anti-dumping rules in this case.

China’s Ministry of Commerce confirmed late on Monday it would impose 73.6 per cent anti-dumping and 6.9 per cent anti-subsidy duties on Australian barley from May 19, saying imports of the grains had “materially damaged local industry”.

The move came less than a week after China suspended imports of red meat from four Australian abattoirs, a decision analysts linked to Canberra’s role in leading calls for an independent inquiry into the origins of the coronavirus pandemic.

Chinese President Xi Jinping told the annual meeting of the WHO on Monday that Beijing would support a “comprehensive review of the global response” to the pandemic just hours before imposing the tariffs.

Australian business has become increasingly alarmed at growing tensions with China. The two countries conducted A$235bn in two-way trade in the year to end June 2019.

Hugh White, a professor of strategic studies at Australian National University, said the timing of the barley tariffs was intended to send a message of Beijing’s displeasure at Canberra’s actions and attitudes — and a warning that bigger measures could be taken in future.

“But I don’t think it’s just about Morrison’s inquiry call. It’s bigger than that,” he said. “China is seeking Australia’s acceptance of its ambitions to replace America as our region’s leading power, and it will keep applying pressure for as long as it takes to achieve that.”

Sino-Australian relations have been in the deep freeze since 2017, when Canberra passed tough laws on foreign interference that targeted Chinese influence activities. A year later Canberra was the first western government to ban Huawei, the Chinese telecoms group, from participating in the roll out of its 5G mobile phone network.

The breakdown in bilateral relations was underlined by frank admissions by Mr Birmingham and David Littleproud, Australia’s agriculture minister, that phone calls to Chinese counterparts were not returned and they had no prior warning of the tariff decision.

However, both ministers attempted to downplay the barley dispute, saying it was not linked to Canberra’s call for an inquiry into Covid-19 as Chinese officials had first raised concerns 18 months earlier.

“There’s no trade war. In fact, even today I think you have seen that there’s increased demand for iron ore out of China,” said Mr Littleproud. “The reality is they have used a process, quite fairly, around a belief that we have not been fair in our trade.”

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