Australia reaches deal with China to settle barley dispute

Foreign Secretary Penny Wong says Australia will suspend the WTO complaint after China agrees to review tariffs.

Australia said on Tuesday it was moving closer to “stabilizing” its fraught relationship with China as the two countries sought to resolve a festering trade dispute over barley exports.

The once cozy trade relationship has deteriorated in recent years as Australia sought closer military ties with the United States and China vied for influence in the Pacific.

Beijing imposed hefty tariffs on key commodities such as barley, beef and wine in 2020, at the height of a bitter dispute sparked by Australia’s former Conservative government.

Australia retaliated by filing a complaint with the World Trade Organization alleging that China had breached international obligations by artificially inflating tariffs “without justification”.

But the country’s centre-left government has taken a much less confrontational stance since its election last May and is prioritizing resuming trade.

In the latest sign of easing tensions between the countries, Foreign Secretary Penny Wong said Australia would temporarily suspend its complaint after China agreed to review its barley tariffs.

“We have made it clear that we believe there is no justification for the measures China has introduced regarding barley,” she told reporters.

“We have also made it clear that we believe it is in the interest of both countries that these trade barriers are removed.”

Wong, who visited Beijing in December, said this showed Australia was slowly “stabilizing relations with China”.

The tariffs, as well as an unofficial ban on Australian coal, are estimated to have cost more than 5 billion Australian dollars ($3.47 billion) in lost revenue from China.

Meanwhile, Beijing has confirmed that Deputy Foreign Minister Ma Zhaoxu will travel to Australia later this week, making him one of the most senior officials to visit in years.

Australia faces a difficult balancing act: China is its largest trading partner, but the United States is a crucial military ally.

Canberra angered Beijing in March by announcing it would buy nuclear-powered submarines from the US as part of an ambitious plan to build Western muscle in the Asia-Pacific.