The trade spat between Australia and China over barley tariffs appears to be worsening, with Australia threatening to take the disagreement to the World Trade Organisation (WTO) if it cannot get an adequate resolution.
China said this week that it would be applying an 80.5 per cent tariff on Australian barley imports for the next five years, which all but wipes out the trade of the crop between the two nations.
According to Reuters, Beijing attributed the sudden tax increase to its discovery of the use of the Murray Darling Plan in Australia, an initiative that aims to boost the wellbeing of the eponymous river system.
Under the scheme, Australia buys water rights from irrigators - but China claims this means Australian barley farmers are subsidised, which gives them an unfair advantage over Chinese producers because they can dump cheap barley into the market.
Australia denies this and its trade minister Simon Birmingham said the nation reserves the right to pursue WTO action if China does not reverse its decision.
"I hope that they will see common sense," he added.
China is Australia's largest single export market for grain, but it is now looking towards the US, Canada and Eastern Europe to satisfy its need for barley.