Australia is set to challenge China at the World Trade Organization (WTO) over Beijing’s decision to impose heavy tariffs on its barley exports, a further indication of worsening relations between the two key trading partners.
Australia’s Trade Minister Simon Birmingham said that the government had advised counterparts in Beijing “to request formal consultations with China.” It could take years to resolve the dispute process, but the organization should acknowledge that the tariffs are not supported by facts and evidence,” he said.
“We will make this formal request to the WTO,” Mr. Birmingham said. “WTO dispute resolution processes are not perfect, and they take longer than would be ideal, but ultimately, it is the right avenue for Australia to take.”
After accusing the country of dumping the grain and subsidizing its farmers, China hit Australian barley with tariffs of over 80 percent in May. According to estimates from GrainGrowers, an industry group, the duties would cost Australian producers around $1.9 billion over the next five years.
“We are highly confident that based on the evidence, data, and analysis that we have put together already, Australia has an incredibly strong case to mount,” Birmingham said.
WTO conflict settlements can often be a long process and it is not anticipated that the outcome will be known for months. A recent case involving China and America took about two years, when a panel ruled in September that when it imposed tariffs on Chinese products in 2018, the US violated worldwide regulations.
Since 2018, when Australia barred China’s Huawei Technologies from building its 5G network on national security grounds, relations between the two countries have been fraught. It further worsened this year after the Australian Prime Minister Scott Morrison called for an international investigation into the origins of the coronavirus. China accuses Australia of being a puppet of the United States and of interfering in its internal affairs.
It’s a marked reversal in the once cordial relationship that saw Australia host a state visit by President Xi Jinping in 2014 and sign a comprehensive free-trade agreement a year later. So far this year, China has hit Australia with a raft of trade restrictions on products including copper, wine, timber and lobster amid deteriorating diplomatic ties.
Mr. Birmingham did not rule out the possibility of raising more WTO challenges against China, noting that the anti-dumping charges against the Australian wine industry, which could drive tariffs to more than 200 percent had similar criteria to those relating to barley, and that the government has the ability to respond.
He added that China’s actions have increased the risk profile of doing business with the Asian country for companies all over the world.
Coal is being affected as well. After ports were verbally ordered in October not to offload such shipments, more than 50 vessels carrying Australian coal are stranded near China. A recent report said that China’s National Development & Reform Commission even seems to formalize its coal curbs after granting permission to power plants to import the commodity without restrictions, except from Australia.
If this proved to be correct, such a ban would also breach WTO rules and the free-trade agreement that China and Australia signed in 2015, Mr Morrison said.