Australia and China Ease Barley Trade Tensions

The Lede: Australia and China have reached an agreement to cooperate on resolving a trade dispute over Australian barley exports

What We Know:

• Australian Foreign Minister Penny Wong announced they had reached a partial truce in a years-long trade dispute with China over sanctions on Australian products worth an estimated $20 billion annually.
• According to Wong, Australia will temporarily suspend its appeal to the World Trade Organisation over China’s tariffs on Australian barley imposed when relations between the two countries deteriorated in 2020. China will be given a three-month period to review the matter before Australia resumes its trade dispute through the WTO.
• Australia hopes that the resolution of the Chinese trade restrictions on Australian barley will lead to the removal of similar tariffs on other Australian products, including wine, meat, shellfish, and cotton, as well as an unofficial ban on Australian coal.

The Background: China imposed tariffs on Australia in response to then-Australian leader Scott Morrsion’s call for an inquiry into the origins of the COVID-19 pandemic in Wuhan as well as Australia’s military cooperation with the U.S. and its allies. China’s tariffs have cost Australia an estimated $3.47 billion in lost revenue. Barley from Australia is used by China to produce Tsingtao beer. Australian Prime Minister Anthony Albanese met with Chinese President Xi Jinping on the sidelines of the G20 Summit in Bali in November and urged an end to the trade standoff between the two countries.

Likely Outcomes:

• The trade disputes between China and Australia have dealt a significant economic blow to the Australian economy. Further concessions and easing may follow this initial step as the two countries work toward restoring trade relations. This can be seen as part of the fluctuations in post-pandemic trade policies in the Asia-Pacific. China may also view this as a future strategy to sidestep the WTO in advantageous situations.
  
• The U.S. will continue to ramp up military cooperation with Australia to achieve its geopolitical objectives. The American government need not be concerned that Australia will stray from its influence as the recent establishment of AUKUS and the sale of nuclear-powered submarines suggest a firm security commitment.

Quotables:

“The reason we are going down this path is because the Australian government wants to see these impediments, these tariffs, lifted as soon as possible. That’s the intention. And we believe it’s in China’s interest.” - Penny Wong, Australian Foreign Minister

“China is an incredibly important trading partner for us and I am very pleased that sanctions are being lifted – they should never have been put on in the first place.” - Peter Dutton, Leader of the Opposition of Australia

Good Reads:

Australia and China reach breakthrough in trade dispute (news.com.au)

Australia reaches deal with China to settle barley dispute (Al Jazeera)