The Chinese Communist Party (CCP) has lifted tariffs on Australian barley exports, citing changes to its “market situation.”
The move comes as Beijing stares down the barrel of food security issues given its heavy reliance on overseas exports for basics like grain and rice, and recent devastating floods.
On Aug. 4, in a surprise announcement, the Chinese Ministry of Commerce said it would drop the “anti-dumping and anti-subsidy” tariffs that have been in place for three years now.
Beijing’s leadership did not provide further details on what prompted the change beyond saying there were “changes in the market situation of barley in China.”
The change will come into effect a day later on Aug. 5.
The move was welcomed by the Australian Labor government with Foreign Minister Penny Wong saying it paved the way for barley exporters to re-enter the Chinese market, which used to account for 70 percent of domestic exports.
“The removal of duties is the result of work by government and industry to resolve this matter.”
Ms. Wong said Australia would discontinue its ongoing action at the World Trade Organisation against Beijing but would continue to pursue its wine dispute at the body.
“We will continue to press for all trade impediments affecting Australian exports to be removed, which is in the interests of both Australia and China,” she said.
Labor ministers have attributed Beijing’s decision to their government’s approach to foreign relations.
“It affirms the approach, the calm and consistent approach, that the Albanese government has taken since we have come to office,” Ms. Wong said.
While Trade Minister Don Farrell said his government’s approach was “working.”
He also claimed that the “$20 billion of trade impediments” under the previous Coalition government has been reduced to $2 billion under Labor.
Meanwhile, Assistant Trade Minister Tim Ayres said there was still “significant progress” left for ties to improve.
“There remain impediments in front of Australian trade categories like ... wine, seafood, and a series of other products. They are absolutely not in the interest of Australian exporters, and they’re not in the interest of Chinese consumers or the parts of the China supply chain that utilise Australian inputs,” he told Sky News Australia.
Industry Reaction
Australian grain growers reacted positively to the latest news.“While it’s expected to be some time before barley flows back into China again, Australian grain traders are eager to rebuild the relationship.”
Victorian farmer Brett Hosking said the sudden increase in demand from China could drive up prices.
“It gives growers a lot of confidence heading into harvest,” he told AAP. “There’s a lot of opportunity in the Chinese market, they have the most unquenchable appetite for Australian barley.”
While the head of Australian Grape and Wine, Lee McLean, said it was a positive step for the wider sector.
“While there has been no change in the situation for Australian wine exports at this point, we hope this announcement may provide a template for removing import duties on Australian wine in due course,” he said.
Rabobank’s senior grains analyst, Dennis Voznesenski, held a similar view.
“Market players who are going to be shipping barley to China may ask for a premium due to risks involved as there are going to be some concerns, if for example, China goes back on its decision,” he said.
Meanwhile, Beijing’s decision comes as its largest grain-producing province of Heilongjiang, in the north-east, gets submerged by heavy rains.
The so-called “great northern granary” has seen devastating floods with authorities even warning of tornadoes and to expect 100 millimetres (3.9 inches) of rain in just a few hours, according to Reuters.
China imports more soybean, corn, wheat, rice, and dairy products than any other country.
