Australia & China: Australia increases WTO pressure on China over barley and wine

Australia is on course for a showdown with China at the World Trade Organisation over Beijing’s tariffs on Australian barley after the two sides clashed in Geneva on Wednesday, April 28, The Australian Financial Review reported.

China rejected Australia’s bid to set up a three-member independent panel of experts to resolve the dispute, but under WTO rules, Beijing will be forced to agree to the panel at the next meeting of the Organisation’s Dispute Settlement Body (DSB) on May 28.

The barley imbroglio will be the first of Australia’s trade spats with China to move into a formal WTO dispute process, although a separate stoush over wine was also discussed in Geneva this week.

Beijing hit Australian barley with a 73.6 per cent anti-dumping duty and a 6.9 per cent countervailing duty last May, in a move Canberra regards as politically motivated.

Previously about half of Australia’s feed barley and 86 per cent of its malting barley, by value, was exported to China – but that trade has withered since Beijing’s taxes took effect.

Australia’s trade diplomats began raising the issue at WTO meetings late last year, and the barley industry appealed to China’s commerce ministry to reverse the decision – all to no avail. Intensive talks in late January also bore no fruit.

“As no concrete steps have been taken to date to respond to our concerns, Australia is now requesting the establishment of a WTO panel to examine this matter,” Australia’s Geneva diplomats told the DSB meeting on April 28, documents seen by The Australian Financial Review show.

“We value China and Australia’s strong economic and community ties and remain open to further discussions with China, with a view to resolving the issues we have raised.”

Beijing’s Geneva envoys responded that Chinese officials had “conducted a transparent, thorough and fair investigation in relation to the imports concerned from Australia”.

This had “finally determined the existence of dumping and subsidies, and found these trade distortions had caused material injury to our domestic industry”, prompting the anti-dumping duties.

The diplomats said talks on the sidelines of the WTO’s formal processes had been “constructive” and the Chinese were “willing to continue engagement with Australian side”.

But the dispute looks set to go to full arbitration, as pledged by Trade Minister Dan Tehan in mid-March.

Canberra had been raring to go, but the DSB meeting that took place on Wednesday was delayed nearly a month following an unrelated argument between the US and Venezuela that temporarily put the whole system on ice.

Earlier in the week, Australia used a separate WTO committee meeting on subsidies to object to Beijing’s countervailing duties on wine, which form part of a massive anti-dumping salvo that has shut Australian wine out of the Chinese market.

Geneva officials at that meeting relayed that Australia’s diplomats said that in both cases, the federal subsidies Beijing had used to justify its countervailing duties were not related to barley growers or winemakers.

The two sides held what Australian diplomats called “a constructive bilateral meeting” on wine last week.

Australia said it was “open to further discussions”, but Beijing’s trade envoys insisted that its processes were “fully compliant with Chinese laws and regulations as well as WTO rules”.

29 April, 2021