The agreement between Australia and China to resolve their barley dispute without World Trade Organization adjudication is evidence that relations have improved.
It raises confidence Australia can maintain a constructive relationship with China, even as U.S.-China relations continue to deteriorate.
China imposed an 80.5 per cent import tariff on Australian barley in May 2020, on the grounds that it was sold in the Chinese market at a lower price than its price in Australia and was subsidized, harming China’s barley growers. China’s Ministry of Commerce began an anti-dumping and anti-subsidy investigation in November 2018.
Read Also
Farming still has digital walls to scale
Canadian farms still face the same obstacles to adopting digital agriculture technology, despite the years industry and policy makers have had to break them down.
At the time, it was perceived as retaliation for more than a dozen anti-dumping actions taken by Australia against Chinese imports over a decade. But the timing of the tariff decision, just weeks after Australia called for an international investigation into the origin of COVID-19, meant it was also perceived as part of a broader campaign of Chinese economic coercion that included actions against Australian coal, beef, lobster and wine.
In December 2020, Australia lodged its claim against the barley tariffs with the WTO. The breakdown in the official relationship made it impossible for the dispute to be resolved via consultation.
On April 11, both parties requested the WTO suspend proceedings. This follows nearly a year of efforts to repair the relationship following the Australian election.
The agreement came in the same week that Australia hosted China’s deputy foreign minister, Ma Zhaoxu. Official visits by China’s Foreign Minister Qin Gang (who met Australian Foreign Minister Penny Wong in March during a G20 meeting) and senior officials from other ministries like agriculture and education are expected to follow.
Digging into the details of the barley deal, China has agreed to conduct an expedited review of barley tariffs in the next three or four months.
China’s Ministry of Commerce initiated a review on April 14, based on an application lodged by the China Alcoholic Drinks Association. The review is needed for the ministry to find a reasonable ground to remove the duties. The standard time frame for such a review is 12 months.
For Australia, this offers a quicker path to get barley back in the Chinese market than proceeding with the WTO case.
While a decision from the WTO panel hearing the dispute was expected in just days, a finding in Australia’s favour could have meant another year before tariffs were terminated. This is because China would retain the option of appealing the decision. Even if it lost the appeal, it could have delayed tariff removal.
For China, a more strategic goal might be alleviating Australia’s resistance to China joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The trade pact involves 11 Pacific Rim nations and now Britain, whose request to join was approved by the other signatories in March.
China needs consensus approval from all CPTPP parties, and Australia has made its position crystal clear: China must end its trade sanctions and show a capability and willingness to live up to the CPTPP’s high standards.
Resolving the barley dispute is a starting point. It will also demonstrate that a rules-based global trading system can influence China’s behaviour.
The anticipated resolution of the barley dispute is not an isolated achievement. It demonstrates the effectiveness of the current Australian government’s diplomatic approach to China.
This has involved incrementally rebuilding economic co-operation while managing disagreements on values and security issues through calm and professional engagement. Amid geopolitical tensions with the U.S., China is also looking to stabilize its external environment.
Economic co-operation remains a standout area of common interest. Add in political willingness and diplomatic wisdom, and cautious optimism can be replaced by reasonable confidence in the upward track of the Australia-China relationship.
– This article first appeared on The Conversation, by Reuters.
