China has announced that it will lift the tariffs on Australian barley imports from Aug. 5, signalling a thaw in the trade relations between the two countries that have been strained since 2020.
The tariffs, which amounted to 80.5% of the import value, were imposed by China in May 2020, accusing Australia of dumping and subsidising its barley exports. The move effectively shut down the Australian barley market in China, which was worth as much as $1.31 billion a year.
Australia denied the allegations and filed a complaint with the World Trade Organization (WTO) in December 2020, challenging China’s decision. However, in April 2021, Australia agreed to suspend its WTO case after China agreed to review its tariffs.
On Friday, China’s Ministry of Commerce said that it was no longer necessary to impose the tariffs on Australian barley, citing changes in the Chinese barley market. It did not elaborate on what those changes were.
The announcement was welcomed by Australia, which said that it would discontinue its legal proceedings at the WTO and that it expected a similar process to be followed for the removal of duties on Australian wine, another product that was hit by Chinese tariffs in March 2021.
The removal of the barley tariffs will also benefit China, which is facing supply concerns after Russia withdrew from a humanitarian pact to deliver key Ukrainian grains to global markets. China is the world’s largest consumer of barley, mainly used for animal feed and beer production.
The decision also indicates an improvement in the bilateral ties between China and Australia, which deteriorated after Australia supported a call for an international inquiry into China’s handling of the COVID-19 pandemic, which was first reported in the Chinese city of Wuhan.
Besides resuming Australian coal imports in January, China has also recently released two Australian citizens who were detained in China on national security grounds.