China Scraps Australian Barley Tariffs As Trade Relations Thaw

Cargo containers are seen at a port. (Source: Fred Prouser/Reuters)

(Bloomberg) -- China will scrap import tariffs on Australian barley from Aug. 5 in the latest sign of improving ties between the two countries.

The commerce ministry said it's no longer necessary to continue imposing anti-dumping and anti-subsidy tariffs on Australian barley following changes in the Chinese market, according to a statement Friday.

Beijing imposed tariffs of more than 80% on Australian barley in May 2020, accusing its exporters of dumping on the Chinese market. The move came as bilateral ties were spiraling downward after then-Prime Minister Scott Morrison called for an international investigation into the origins of Covid-19. Beijing also restricted imports of other Australian goods including wine and lobsters.

But since the election of the center-left Labor government in May 2022, communications between Canberra and Beijing have resumed and relations improved markedly.

The Australian government said Friday it expects to follow a similar process to remove Chinese duties on the country's wine. “In the meantime, we are continuing to pursue our wine dispute at the WTO and remain confident in a positive outcome,” according to the statement, referring to the World Trade Organization by its initials.

Shares of Australia's Treasury Wine Estates Ltd. rose as much as 3.9%, the most since April 11. Barley exporters including United Malt Group Ltd. and GrainCorp Ltd. also edged higher before paring gains.

In April, Beijing announced it would hold a three-month review into the barley tariffs, in return for which Canberra agreed to suspend its case against China in the WTO. Beijing sought a one-month extension of the barley review in July, meaning a decision was due by late next week.

The value of Australian barley exports to China averaged around A$1.2 billion ($790 million) a year between 2014–15 and 2018–19, according to estimates from the Canberra government.

Even with the tariffs lifting, Australian barley exporters will remain cautious of rushing back to China. Many have found new markets, boosting shipments to Saudi Arabia, Japan, Vietnam, Kuwait and Mexico.

“It's important to note that Australia found alternative buyers of barley while the Chinese anti-dumping tariffs were in place,” Rabobank agricultural analyst Dennis Voznesenski said. “A risk premium will likely be required, at least initially, for exporters to redirect trade flows into China.”

--With assistance from Hallie Gu, Jackie Edwards and Ben Sharples.

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