Australia and China reach deal over barley tariffs dispute

Industry News | | MIC Customs Solutions |

A long-running trade dispute between China and Australia may be closer to resolution after the countries agreed to a new deal on barley tariffs.

China and Australia have announced a new agreement that may see Beijing remove tariffs on barley imports in order to ease their ongoing trade dispute.

Restrictions were imposed in 2020 at a time of heightened diplomatic tension between the two countries, with Canberra's calls for an inquiry into the origins of COVID-19 one of the key triggers for additional duties and other restrictions on products such as barley, coal, timber and wine.

Now, however, the two sides have agreed to a new pathway that will include China undertaking an 'expedited review' of the duties on barley, in exchange for Australia dropping its World Trade Organization (WTO) challenge over the rules.

While this does not yet guarantee the removal of tariffs, it is seen as a positive step forward that may prevent a formal WTO ruling against Beijing. The review is expected to take three months, but could be extended for a fourth.

Currently, barley imports to China are subject to tariffs of more than 80 percent, which the Chinese government argues are necessary to prevent heavily-subsidized products being dumped into its market. Canberra has strongly rejected these claims.

Before the imposition of the tariffs, China was the largest importer of Australian barley, with annual shipments averaging around AU$1.2 billion a year. However, the tariffs were said to have effectively ended the country's position as a feasible source for such products. 

Instead, Chinese buyers - primarily beer brewers - have been turning to other markets for barley, such as France and Canada.

Australian trade minister Don Farrell welcomed the news as a "sign of goodwill" from Beijing and expressed hopes that the move will help resolve long-standing issues between the nations.

"We hope that this will be a template for then moving on to the other areas of dispute, in particular in respect of Australian wine, which is also subject to very high tariffs," he added.

Reuters noted that prices for barley have fallen this year in anticipation of the resumption of Australian imports. Yang Zhenglong, general manager at Malteurop China, also welcomed the news, saying: "Everybody is waiting for Australian barley to come."