Trade disputes between Australia and China in 2020

SINGAPORE – China is Australia’s largest trading partner and a top export destination.

Australia is one of the few developed countries on Earth that exports more to China than from China. In the 2018-2019 fiscal year, China accounted for about 32.6% of all Australian exports – that’s about 153.2 billion Australian dollars ($ 116.79 billion). By far the largest export was iron ore.

Relations between the two countries have deteriorated since Australia backed a call for an international investigation into China’s handling of the coronavirus, which was first reported in the Chinese city of Wuhan. Last month, Australian news media reported that the Chinese embassy there had threatened the Australian government and handed over a list of alleged grievances against Canberra.

China has taken several measures this year that hinder Australian imports, ranging from levying tariffs to imposing bans and restrictions. Here’s a look at the affected Australian export sectors:

In May, Beijing removed 80.5% of its anti-dumping and anti-subsidy duties on Australian barley – a measure that effectively cut Australian barley producers off the Chinese market. The Chinese Ministry of Commerce claimed that an investigation that began in 2018 confirmed that Australia had dumped barley, which allegedly caused significant damage to China’s domestic industry, Reuters reported.

Australian government officials have denied the allegations, saying the country’s farmers are among the least-subsidized OECD countries. Canberra has also asked the World Trade Organization to mediate in the dispute. Experts expect it will take some time for this dispute to be resolved.

According to Australian media, China has suspended imports of six Australian beef suppliers. The latest ban will come earlier this month. For the first five bans, China reportedly raised labeling issues and health certificates.

Local media also reported this month that Australian lamb exporters said they were unable to return to the Chinese market under Covid-19 restrictions and that exports of honey, fruits and pharmaceuticals to China are in danger.

China has banned imports of timber from the Australian states of Queensland, Victoria and more recently South Australia and Tasmania.

“Chinese customs has detected many cases of live pests in timber imported from Australia, such as longicorn and buprestid beetles, since January. If these live pests are allowed into China, it will pose a serious threat to China’s forest production and environmental security” , said the spokesman for China’s Foreign Ministry. Wang Wenbin said at a Nov. 2 press conference after reports of the ban on timber exports from Queensland.

“China has notified the Australian side of things and asked the Australian to investigate and take action to prevent a recurrence,” he said.

Chinese media have said the country’s chief economic planner has authorized power plants to import coal without clearance restrictions, except for Australia, Reuters reported. This followed previous reports that Beijing had verbally announced to state-owned companies and steel mills that they would stop importing Australian coal.

Coal is Australia’s third largest export to China. But the percentage of coal exports to China has fallen over the years, according to analysts who say Australian exporters have found additional buyers in places like South Korea, Vietnam and Japan.

According to local media, tons of live lobsters were stranded in Chinese airports and clearing houses in November, awaiting inspection by Chinese customs officials.

Australia’s Seafood Trade Advisory Group said last month that the industry is temporarily halting exports of crayfish to China and is working with Chinese and Australian authorities to respond to Beijing’s new border inspection protocols. The group said there were also plans to find other lobster destinations, including Australia’s domestic market.

Despite export restrictions and tariffs on the above sectors, Australia’s economy has remained relatively untouched by Beijing’s movements. That’s probably because China hasn’t yet imposed any kind of restrictions on Australia’s largest export to the country: iron ore. Prices have risen to record highs in recent weeks.

Given China’s reliance on Australian sea iron ore, along with an increased appetite due to aggressive industrial stimulus measures, it is unlikely that iron ore trading will be significantly affected, National Australia Bank analysts said.

“Almost half of all Australian exports to China are iron ore. Goods subject to tariffs or other restrictions make up a small portion of total GDP, although it will have significant sector-specific and regional impact,” analysts said in a note from December 14. .

But they warned that Australia’s education and tourism industry, which relies on Chinese students and tourists, could be affected if Beijing’s attitude toward them changes once the borders reopen.