Australia reaches deal with China to settle barley dispute

Foreign Minister Penny Wong says Australia will suspend WTO complaint after China agreed to review tariffs.

[File: Pascal Rossignol/Reuters]

Australia said Tuesday it was inching closer to “stabilising” its fraught relationship with China, as the two countries moved to solve a festering trade dispute over barley exports.

The once-cosy trading relationship has soured in recent years as Australia sought closer military ties with the United States and China vied for influence in the Pacific.

Beijing slapped hefty tariffs on key commodities such as barley, beef and wine in 2020 at the height of a bitter dispute inflamed by Australia’s former conservative government.

Australia retaliated by complaining to the World Trade Organization, alleging China had breached international obligations by artificially jacking up tariffs “without justification”.

But the country’s centre-left government has adopted a far less confrontational stance since its election in May last year, prioritising the resumption of trade.

In the latest sign of thawing tensions between the countries, Foreign Minister Penny Wong said Australia would be temporarily suspending its complaint after China had agreed to review its barley tariffs.

“We have made it clear that we believe there’s no justification for the measures that China introduced in relation to barley,” she told reporters.

“We have also made clear that we believe it is in both countries’ interests for these trade impediments to be removed.”

Wong, who visited Beijing in December, said this demonstrated that Australia was slowly “stabilising the relationship with China”.

The tariffs, as well as an unofficial ban on Australian coal, are estimated to have cost more than 5 billion Australian dollars ($3.47bn) in lost revenue from China.

Meanwhile, Beijing has confirmed that Vice Minister for Foreign Affairs Ma Zhaoxu will travel to Australia later this week, making him one of the most senior officials to visit in years.

Australia faces a difficult balancing act – China is its largest trading partner, but the United States is a crucial military ally.

Canberra angered Beijing in March by announcing it would buy nuclear-powered submarines from the  US as part of an ambitious plan to bulk up Western muscle in the Asia-Pacific.

Source: AFP