China’s actions on Australian barley and beef follow WTO rules but are part of harmful polarisation

May 13, 2020: The headlines suggest that China’s threat to impose punitive tariffs on imports of barley from Australia, valued at A$1.3 billion, and banning of Australian beef over labelling issues are all about Prime Minister Morrison’s call for an investigation of China’s role in the COVID-19 pandemic.

In fact, China’s anti-dumping investigation started late in 2018 well before the pandemic. The investigation is now completed and a decision about tariffs will be made very soon, on May 19. But this timing suits the Chinese government in its protests against the Australian government’s call for the COVID-19 investigation.

Anti-dumping cases are allowed under WTO rules on the grounds that a product is being exported at a price below its real costs of production. Australia has launched 30 anti-dumping cases under WTO rules and 18 of them were against Chinese imports including steel, paper and solar panels. The barley case, alleging fuel and marketing subsidies, was China’s first anti-dumping action against Australia.

Under the China-Australia FTA, which came into force in December 2015, China allows barley imports from Australia at zero tariff. Now these imports face an 80.5 per cent tariff which would eliminate them from the Chinese market, affecting about 70 per cent of Australian barley production.

China also announced it had suspended the licences for Australian meat exports from three major Australian meat processors representing over 30 per cent of Australian meat exports to China. This appears to be based on allegations that the labelling does not conform to WTO technical standards.

The ABC reports that Australian Minister Simon Birmingham said the suspensions were due to "highly technical issues", some of which dated back more than a year, and he was seeking urgent talks with the Chinese Trade Minister to resolve them.

Australia can appeal against these moves in the WTO, but the US refusal to approve appointments has crippled the WTO Appellate Body. Australia would have to resort to the government-to government dispute mechanism in the ChAFTA, or hope that China would agree to a voluntary mediation through an emergency procedure in the WTO. Either way, it could take a long time.

These cases are more difficult to resolve because of the breakdown of the disputes process established through the WTO, caused by US actions. Their timing is a protest by China at its treatment on a range of other issues, including the 5G ban on Huawei, and the COVID-19 investigation call.

All these actions contribute to more general international tensions and to the polarisation caused by the US-China trade war, which will only damage the global trading system.

AFTINET advocates for a rules-based trading system with fair trade rules based on human rights, labour rights and environmental sustainability. International cooperation, not unilateral action, is needed now more than ever in the context of the pandemic to ensure access to medicines and medical products that will save lives.