Australia’s WTO Barley Dispute Suspended while China Expedites Case Review

Australian Foreign Minister Penny Wong announced on the 11th April 2023 the Australian government had reached an agreement with the PRC that Australia would temporarily suspend the WTO dispute while China expedited review of duties on Barley over a three-month period, which may extend to a fourth if required.

Foreign Minister Wong noted Australia was pleased China has engaged in dialogue but asserted Australia was still of the view that the trade impediments on Australian Barley are not justified and that the WTO case would be relaunched if a removal of tariffs was not forthcoming.

Prior to the introduction of Chinese tariffs, PRC was Australia’s largest Barley export market, reaching a high point of 6.3mmt being exported in 2017-18. This fell to practically zero when tariffs were applied and has meant Australia has had to revisit previous markets, such as Saudi Arabia, and develop new ones in South Africa and South America.

Grower groups such as GPA suggest that although the Australian Barley crop has been fully sold each year since the Chinese tariffs were applied, the tariffs have cost Australian Growers A$50/mt or ~600-700 million pa while GTA estimates the loss is more like A$500million pa. It’s our view that since most of the trade to China was based on FAQ pricing both estimates are well over stated and the premium loss is more like A$10-20/mt, which on an average 4mmt trade, equates to A$60 million pa but even this is debatable given the openness of the global Barley market

It’s a testament to the sustainability of the Australian Barley industry that it has recorded strong growth during this period. Many in the industry believe the WTO interim report was favorable to Australia and that this current move is a clever diplomatic ‘off ramp’ for China to save face within the WTO and that Barley trade is likely to resume in the last half of 2023. The Australian Barley industry as a whole will welcome back this important market and are looking forward to a positive outcome to the Chinese review.