China places anti-dumping and countervailing measures on Australian barley in May 2020.
Context
The Chinese government initiated an anti-dumping investigation of Australian barley in November 2018. Australia’s barley industry strongly rejected this allegation. Subsequently, China announced a five-year, 80.5% tariff on Australian barley imports in May 2020, consisting of a 73.6% anti-dumping tariff together with a 6.9% countervailing duty. Referring to its initial investigation, China’s Ministry of Commerce stated that “[t]he investigating authority has ruled that there was dumping of imported barley from Australia and the domestic industry suffered substantial damage.” It has been claimed that this dispute was a reaction to Australia’s prior use of anti-dumping mechanisms against China. However, it is also widely accepted that this instance of Weaponised Trade was part of a broader deterioration of political and economic ties between Beijing and Canberra, that was exacerbated by Australia’s call for an inquiry into the origins of COVID-19.
Impact
The measure impacted barley, used not only for making beer but, crucially, for feeding pigs and other livestock. The Chinese commerce ministry identified four Australian companies in its May 2020 announcement: Kalgan Nominees Pty Ltd, JW & JI Mcdonald & Sons, and Haycroft Enterprises – though the mechanisms applied across the board.
Responses
i) Australian Industry
Australian industry associations claimed that the mechanisms “could cost Australian grain industry and notably rural and regional economies at least $A500 million perannum.” Acting general manager of the Australian GrainGrowers trade association, Sean Cole, later told press that this Weaponised Trade had “caused us to pivot, so we found new markets, like Mexico. We managed to have (Mexican) tariffs lowered, which were previously in excess of 100 per cent”. Saudi Arabia emerged as the major alternative market for Australian exporters.
A graph produced by Bloomberg, based on data from the Australian Department of Agriculture, Fisheries and Forestry, below, shows the sharp decline in Australia’s barley exports to China, together with increases in exports to other markets – particularly Saudi Arabia.
(ii) Australian Government Responses
The Australian government’s initial response to these measures, in May 2020, was vocal in its rejection of Beijing’s claims and actions. Then trade minister Simon Birmingham told press that “Australia is deeply disappointed with China’s decision to impose duties on Australian barley”, adding that “We reject the basis of this decision” and that “[w]e 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.” In June 2020 the Australian government’s Bureau of Agricultural and Resource Economics and Sciences published a short report on the likely impacts of this Weaponised Trade mechanism on Australia’s agricultural sector. In December 2020 the Australian government initiated WTO proceedings against China, claiming that these measures were “inconsistent with provisions under the WTO’s Anti-Dumping Agreement, the Agreement on Subsidies and Countervailing Measures, and the General Agreement on Tariffs and Trade (GATT) 1994.” That case is China – Anti-Dumping and Countervailing Duty Measures on Barley From Australia (DS598) – available here.
At the same time, Australia’s Commonwealth government promoted trade diversification in the barley industry towards a number of different markets.
(iii) Chinese Industry Responses
China replaced Australian barley with that from alternative markets, including “France, Argentina, Canada and Ukraine”.
(iv) Chineses Government Responses
In May 2020 Chinese state media suggested that US imports could replace Australian barley sources, asking rhetorically“[i]f US agricultural products take over Australia’s share in the Chinese market, then who is the antagonist of Australian businesses, China or the US?”
In the WTO
Australia formally initiated a WTO dispute with China (DS598) on 16 December 2020.
A statement in July 2023 by the Australian delegate to the WTO’s Trade in Goods Committee criticised China in the following terms and recorded in the minutes of meeting:
China’s actions are not isolated to Australia. There are many instances of China using economic coercion against WTO Members in apparent retaliation for unconnected bilateral issues. It is clear that there is a broader pattern of similarly coercive actions taken by China against other Members. We are all aware of many instances where China uses, or threatens to use, abusive, arbitrary, or pretextual trade actions to pressure or influence the legitimate decision-making of sovereign governments.
In a joint declaration in August 2023, the parties notified the WTO that a mutually agreed solution had been reached and the WTO panel’s work was ended (see below).
Status
China announced a review into these measures in April 2023, following a general improvement in bilateral ties under the new Albanese administration in Australia. A press release by the Australian Department of Foreign Affair and Trade advised that in April 2023 the Chinese Government had agreed to conduct an expedited review of the measures. As part of this arrangement, Australia agreed to a temporary suspension of its WTO case on this issue.
In August 2023, Beijing confirmed that it would remove the tariffs on Australia’s barley exports, and Australia and China both informed the WTO’s Dispute Settlement Body that they would be formally ending WTO proceedings. Chinese state media referred to the resumption of this trade as “an important symbol of the recovery of China-Australia trade relations.” An industry group – Grain Producers Australia – responded positively to the bilateral resolution of the dispute, noting that “[t]his process to reach a resolution would be significantly shorter than if the WTO process continued”. Between August and early December 2023, Chinese government data showed that it had imported AU$139 million of Australian barley.
References & Further Information
AFP. 2023. “China’s appetite for Australian barley is back, three years after tariffs halted the near-$1 billion market.” ABC News. December 30. Available at: https://www. abc.net.au/news/2023-12-30/china-australian-barley-appetite-3-years-tariffs-halted-market/103274912
Al Khawaldeh, K. 2023. “Saudi Arabia stepped in when China would not buy Australian barley, but will that trade survive?” The Guardian. August 11. Available at: https:// http://www.theguardian.com/australia-news/2023/aug/11/saudi-arabia-stepped-in-when-china-would-not-buy-australian-barley-but-will-that-trade-survive
Australian Associated Press. 2020. “Australia ‘deeply disappointed’ after China imposes 80% tariff on barley imports.” The Guardian. May 19. Available at: https://www. theguardian.com/australia-news/2020/may/19/australia-deeply-disappointed-after-china-imposes-80-tariff-on-barley-imports
Condon, W. 2024. “Grains industry expresses risk to barley trade as China takes lion’s share of Australian exports.” ABC News. February 14. Available at: https://www.abc. net.au/news/2024-02-14/grains-industry-risk-to-barley-trade-as-china-takes-lions-share/103460760
Global Times. 2020. ‘The Minister of Trade in Australia unreasonably complained about China and urged Australian companies to leave the Chinese market’ [澳洲贸易部长无理抱怨中国 还怂恿澳企业家离开中国市场]. May 18. Available at: https://news.ifeng.com/c/7wZEswAFZCa
GIWA. n.d. “China Barley Antidumping and Counterveilling Tariffs.” Grain Industry Association of Western Australia. Available at: https://www.giwa.org.au/news/china-barley-antidumping-and-counterveilling-tariffs/
Gu, H. 2023. “China Resumes Australian Barley Trade After Tariffs Scrapped.” Bloomberg. August 14. Available at: https://www.bloomberg.com/news/articles/2023-08-14/china-resumes-australian-barley-trade-after-tariffs-scrapped?embedded-checkout=true
Hurst, D. 2020. “Why has China slapped tariffs on Australian barley and what can Australia do about it?” The Guardian. May 20. Available at: https://www.theguardian .com/business/2020/may/20/why-has-china-slapped-tariffs-on-australian-barley-and-what-can-australia-do-about-it
Kastner, J. and D. Simes. 2021. “China tariff on Australia’s barley reshapes global trade.” Nikkei Asia. March 19. Available at: https://asia.nikkei.com/Business/Agriculture/China-tariff-on-Australia-s-barley-reshapes-global-trade
Ministry of Commerce of the Peoples’ Republic of China. 2020. ‘Notice of the Final Awards on the Anti-Dumping and Anti-Subsidy Investigation of Imported Barley from Australia’ [对原产于澳大利亚的进口大麦反倾销调查和反补贴调查的最终裁定]. May 18. Available at: http://www.mofcom.gov.cn/article/ae/ai/202005/20200502965864.shtml.
Ministry of Commerce of the Peoples’ Republic of China. 2020. ‘Notice of reviewing the decision on the antidumping and countervailing investigation into Australian barley’ [关于原产于澳大利亚的进口大麦反倾销措施和反补贴措施复审裁定的公告]. August 4. Available at: https://perth.mofcom.gov.cn/sqfb/art/2023/art_3716e660a67941028808efe5980fabc5.html
Ministry of Foreign Affairs of the Peoples’ Republic of China. 2020. ‘Spokesman for the Ministry of Foreign Affairs, Wang Wenbin, held a regular press conference on 16 December 2020’ [2020年12月16日外交部发言人汪文斌主持例行记者会]. December 16. Available at: https://www.fmprc.gov.cn/fyrbt_673021/jzhsl_673025/202012/t20201216_5419640.shtml.
Pal, D. and Patton, D. “Australia reaches deal with China in barley dispute as trade ties improve.” Reuters. April 12. Available at: https://www.reuters.com/world/asia-pacific/australia-says-reached-agreement-with-china-resolution-dispute-over-barley-2023-04-11/
Smith, M., B. Thompson, and J. Kehoe. 2018. “China launches anti-dumping probe into Australian barley imports.” Australian Financial Review. November 19. Available at:
WTO. n.d. “Dispute Settlement: DS598: China — Anti Dumping and Countervailing Duty Measures on Barley from Australia.” World Trade Organization. Available at: https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds598_e.htm
WTO. n.d. “Australia initiates WTO dispute complaint against Chinese barley duties.” World Trade Organization. Available at: https://www.wto.org/english/news_e/ news20_e/ds598rfc_21dec20_e.htm
Zhou, W. 2018. “Barley is tactical weapon as China takes on Australia over dumping.” UNSW Newsroom. November 23. Available at: https://www.unsw.edu.au/newsroom/ news/2018/11/barley-is-tactical-weapon-as-china-takes-on-australia-over-dumpi