China hits Australia with barley tariff in latest blow to relations

BEIJING/SYDNEY (Reuters) - China added to tensions with Australia on Monday by announcing anti-dumping and anti-subsidy duties totalling 80.5% on Australian barley imports from May 19, which is expected to all but halt a billion-dollar trade between them.

FILE PHOTO: Imported barley is transported from a cargo ship at the port of Nantong, Jiangsu province, China February 21, 2014. REUTERS/Stringer

China’s Ministry of Commerce said it had confirmed dumping by Australia and significant damage on its domestic industry as a result, following an inquiry which began in 2018.

The tariffs on barley, which will remain in place for five years, are the latest agricultural commodity to be affected by a deteriorating relationship between Canberra and Beijing.

The Chinese ministry said duties of 73.6% would be levied on all companies, including four named exporters, The Iluka Trust, Kalgan Nominees Pty. Ltd, JW&JI Mcdonald & Sons and Haycroft Enterprises, as well as an anti-subsidy duty of 6.9%.

Australia is the biggest barley supplier to China, exporting about A$1.5 billion to A$2 billion ($980 million to $1.3 billion) worth a year, which is more than half its exports.

Barley is used both for brewing and animal feed.

“There aren’t many alternative markets. It could be sold to Saudi Arabia, but it will be heavily discounted to what Australian farmers could have received by selling to China,” an Australian government source told Reuters.

By contrast, China - the world’s top barley importer - will simply shift purchasing to other key producers, including France, Canada, Argentina and some smaller European exporters.

“It’s very replaceable,” said Andries De Groen, managing director at Germany headquartered barley trader Evergrain.

Australia’s Minister for Trade Simon Birmingham said the Chinese decision was deeply disappointing.

“We reject the basis of this decision and will be assessing the details of the findings while we consider the next steps,” Birmingham said in an emailed statement.

“We reserve the right to appeal this matter further.”

Australia’s relationship with Beijing soured in 2018 when it banned Huawei [HWT.UL] from its nascent 5G broadband network, while tensions were escalated by concerns within Canberra over China’s attempts to secure greater influence in the Pacific.

“The issue is part of broader juggle that Australia makes between its political place in the west and economic place in the east,” Tobin Gorey, director of agricultural strategy, Commonwealth Bank of Australia, said of the barley tariff.

China has been angered in recent weeks by Australia’s call for an independent inquiry into the origins of coronavirus.

Last month, Beijing’s ambassador to Australia said Chinese consumers could boycott Australian beef, wine, tourism and universities in response to Canberra’s demand.

Days later, Beijing suspended imports from four of Australia’s largest meat processors, worth about 20% of Canberra’s beef exports to China.

Reporting by Min Zhang and Dominique Patton in BEIJING and Colin Packham in SYDNEY; Editing by Louise Heavens and Alexander Smith