China erases tariffs on Australian barley amid easing of trade tensions

China’s Ministry of Commerce said Friday (August 4) that it will start dropping import restrictions on Australian barley from Saturday (Aug. 5). 

Anti-dumping and anti-subsidy tariffs on Australian barley were in place for the last three years, reported Reuters. The restrictions affected bilateral trade worth billions.

Earlier in April, both nations agreed to resolve their bilateral trade disputes, under which Canberra dropped a WTO case against Beijing while China agreed to review its import restrictions on Australian goods. 

Apart from barley, there are a few remaining Australian goods, including wine, which still face heavy import duties in China.

“We have been clear that we expect a similar process to be followed to remove the duties on Australian wine,” three Australian ministers said in a joint statement.

Experts also raise concerns

Experts say the decision by China would yield exciting results for the Australian barley market, as farmers expected more revenue but warn that farmers with malt-quality barley were likely to attract a premium over the risks involved.

“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,” Rabobank senior grains analyst Dennis Voznesenski was quoted as saying by Reuters.

Grain Producers Australia CEO Colin Bettles appreciated the move, calling it a win for Chinese consumers and industry as well as local exporters.

Recent timeline of the Australia-China ties

The relationship between Australia and its largest trade partner China took a turn for the worse in 2020. It started with Australia’s decision to initiate an inquiry into the origins of the COVID-19 virus, a move that Beijing perceived as provocative.

Watch: Australia PM says breakdown in US-China relations would be devastating

In response to Australia’s call for an investigation, China enacted a series of retaliatory actions, including the imposition of anti-dumping duties on Australian wine and barley.

One of the notable measures taken by Beijing was the implementation of substantial tariffs, amounting to a staggering 80.5 per cent on Australian barley in May 2020. 

In the face of these developments, Australia responded by formally lodging a complaint with the World Trade Organization (WTO) in December of the same year. 

The landscape changed when Australia’s centre-left Labor party secured victory and assumed power last year. Since then, the tensions between the two nations have eased.

For instance, after a hiatus of nearly three years, China resumed its purchases of Australian coal in January 2023. Additionally, China’s announcement in May to resume the import of Australian timber also came as a major sign of the ongoing rapprochement.