Australia escalates China trade dispute with WTO action

Australia brings in ‘international umpire’ after China imposed 80% tariffs on its barley

Australia is escalating its trade dispute with China to the World Trade Organization, after attempts to privately resolve the issue failed.

In one of his last major actions as trade minister, Simon Birmingham announced bringing in the WTO as adjudicator, a process that can take years to complete, was the “logical and appropriate next step”.

Birmingham, who is moving to the finance portfolio, said Australia would formally advise the WTO of its intentions on Wednesday night.

“We have been a long-standing defender of the international rules-based system, of the importance of multilateral cooperation and engagement. In doing so it is appropriate that, when we argue for there to be international rules and an independent international umpire to resolve disputes, that when we find ourselves in the case of having such disputes we call in the umpire,” he said.

“We ask the independent umpire to adjudicate and ultimately help settle those disputes.”

China effectively blocked Australian farmers from exporting barley by imposing an 80% tariff on exports of the grain in June, alleging Australia was “dumping” – when exporters sell produce at a lower price on the overseas market versus the domestic market, a charge Australia has emphatically denied.

The Australian government had hoped to resolve the dispute using internal processes, but has been unable to directly raise their counterparts in the Chinese Communist party.

Birmingham admitted the WTO process was “not perfect” but said Australia had been left with no choice and encouraged other nations to join the process.

“It could take years,” he said. “This is about achieving, as much is anything, a systemic outcome as well as a specific outcome.”

Since the barley tariffs were imposed, Australian producers have faced difficulties exporting wine, lobster, beef, timber and cotton to China, with the most recent dispute putting Australia’s $14bn annual coal exports in question.

Only the barley dispute has reached the threshold to bring in the international trade umpire.

Birmingham said Australia expected a positive result.

“Australia has an incredibly strong case to mount in relation to defending the integrity and proprietary of our grain growers and barley producers,” he said.

“We have full confidence that they are not unduly subsidised, that they do not dump their product in global markets, they have operated with nothing but commercial imperatives in relation to the way they have engaged the China market, provided the Chinese customers, over a sustained period of time, with a high-quality, value-for-money, market-oriented opposition in relation to Australian barley.”

Chinese state media announced a ban on Australian coal on Monday, which both Birmingham and the prime minister, Scott Morrison, said had not been confirmed to them through official channels on Tuesday. At least 50 coal ships, laden with Australian coal have been unable to dock in China.

A spokesperson for the Chinese state embassy in Australia accused the Morrison government of “politicising economic, investment and technological issues” as well as discriminating against Chinese companies, in a nod to the Turnbull government decision to ban Chinese tech company Huawei from building Australia’s 5G network.

“Recently we’ve seen many reports in which Australia dresses up as a victim, pointing an accusing finger at China, directly or by insinuation,” the spokesperson said.

“This move is meant to confound the public and we will never accept it. In fact, it is the Australian side that has been politicising economic, investment and technological issues, and discriminating against Chinese companies in violation of market economy principles and international trade rules.

“There is nothing to worry about if it is normal exchange and cooperation based on mutual respect and in compliance with rules. On the contrary, what is worrying for us is such moves as politicising and obstructing normal trade activities, interfering in others’ internal affairs in defiance of basic norms governing international relations and even provoking confrontation.

“We hope that the Australian side will reflect upon its own conduct, match its words with deeds, and provide favourable conditions for bilateral practical cooperation in various fields, instead of the opposite.”

The government made the decision to block Huawei following advice from security agencies. The 5G decision was part of a raft of legislation and decisions made by Australia to ward off what the government said were attempts by foreign state-based actors interfering in Australia’s democracy.

The relationship between the two trading nations reached new levels of frostiness earlier this year, when Morrison led a call for an international investigation into the origins and original response to the Covid pandemic.

Since then, China has used anti-dumping investigations to impose tariffs on Australian products.

Australia has previously taken Canada to the WTO following a dispute over wine, and referred India after disagreements on sugar trade.

Contributor

Amy Remeikis

The GuardianTramp

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