China Slaps Australian Barley Farmers With 80% Tariffs For Five-Years

Key Takeaways:

  • Australian barley exports to China will be hit with a 73.6% anti-dumping tarrif and 6.9% anti-subsidy tariff.

  • China says its "domestic industry had suffered substantial damage.

  • $1.5 billion of barley was exported to China in 2018, and $600 million in 2019 due to drought.

  • Politicians downplay the correlation to rising political tensions between Australia and China.

  • Scott Morrison was an early voice calling for an independent investigation into China's handling of the COVID-19 pandemic.

China looks set to make good on its threats on imposing a jaw-dropping 80% tariff on Australian barley, one of Australia’s most valuable crops for export to China, after affirming its determination on the matter.

Chinese officials have said that imports of Australian barley had, in previous years, entered China against trade rules. In a statement, the Chinese Ministry of Commerce said that its “domestic industry had suffered substantial damage” as a result of these imports.

“The Ministry of Commerce conducted an investigation in strict accordance with China’s relevant laws and regulations,” they said, concluding that the 73.6% anti-dumping tariff and 6.9% anti-subsidy tariff would square the damage.

Around $1.5 billion worth of barley was exported to China in 2018, while this figure dropped to $600 million in 2019 due to the impact of the drought on farmer’s yields.

According to a report from The ABC “Barley is considered one of Australia’s top three agricultural exports to China but since 2018 has been at the centre of dumping allegations,” adding that “Beijing’s decision comes amid diplomatic tension between the countries and follows the Morrison Government leading the global push for a COVID-19 investigation.”

There are few doubts now that China’s move is motivated by recent calls for an independent investigation into China’s handling of the pandemic. Just last week we reported on China’s move to blacklist 35% of Australia’s beef exports from four key abattoirs as a result of calls for an investigation into China’s handling of the COVID-19 pandemic.

At that time, trade minister Simon Birmingham and agriculture minister David Littleproud said that China’s move was due to “highly technical issues” that dated back “more than a year” and deflected any suggestion that the move represented a warning sign from China regarding calls for an investigation.

Now, though, Birmingham’s tune has changed, and he has issued a statement stating that “Australia is deeply disappointed with China’s decision to impose duties on Australian barley.”

Birmingham added that “we reject the basis of this decision and will be assessing the details of the findings while we consider next steps.”

“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.”

It’s been reported that Minister Birmingham was unable to organise a phone conversation with Zhong Shan, his Chinese counterpart to discuss the move to place tariffs on Australian barley, as well as last week’s move to blacklist 35% of Australian beef.

Brett Hosking, chairman of the Grain Growers Association has said that the tariffs, effective as of today, would immediately impact farmers, as well as shipments already on their way to China. Hosking said that “industry and government are deeply disappointed and we will continue to engage with the Chinese where we can.”

The Foreign Ministry of China has said that the trade moves do not represent any retaliation or escalation of political tensions related to a coronavirus investigation. That is, in spite of the fact that China’s Australian ambassador, Cheng Jingye saying that “the Chinese public is frustrated, dismayed and disappointed with what Australia is doing now… the parents of these students would also think whether this place which they found is not so friendly, even hostile, whether this is the best place to send their kids.”

Jingye pondered that “it is up to the people to decide. Maybe the ordinary people will say ‘Why should we drink Australian wine? Eat Australian beef?”

“Pending any clear findings about the whereabouts of the virus, it’s inappropriate for non-professionals to jump to any conclusions,” he said.

Agriculture Minister, David Littleproud is still insisting that there is no trade war taking place with China, stating that “everyone needs to take a deep breath, take a cold shower and understand that we produce the best food and fibre in the world and we have marketplaces that we’ll be able to send our barley and other produce into other markets if our producers wish to.”

“There is no trade war,” Littleproud said, suggesting that speculating the tariffs are a form of retaliation is “dangerous.”

He did, however, concede that it is a possibility. “I’d be very disappointed if it is because the Chinese government themselves were party to that agreement last night at the World Health Assembly. So we would find it very disappointing if it is,” he said.

“We are working calmly and methodically with them. The premise of their argument, saying that we have subsidised farmers through farm household allowance - which is a social security payment - and through programs with the Murray-Darling Basin - are false.”

“If we believe that we haven’t been understood appropriately, then the next course of action for us is to refer it to the World Trade Organisation, who is the independent umpire. They’ll make a determination,” he concluded.

Chinese state-run newspaper, the Global Times is reporting that “from China’s perspective, Australia has never been a friendly trading partner, and consultations with the country on trade issues have always been frustrating, which has apparently weakened its motivation to promote bilateral trade.”

“The Australian government seems more interested in exploiting China’s suspension of some beef imports and its potential imposition of tariffs on Australian barley to describe itself as a victim of trade sanctions.”

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