China lifts anti-dumping tariffs on Australian barley after three years, easing supply concerns

China on Friday lifted tariffs on Australian barley imports starting Aug. 5, a move that points to improving bilateral relations and would alleviate supply concerns after Russia suspended a humanitarian corridor to deliver key Ukrainian grains to global markets.

These anti-dumping tariffs and countervailing duties were imposed in mid-2020 at the height of diplomatic tensions between China and Australia. Beijing slapped import tariffs on several Australian exports from wine and red meat to lobsters and timber. Besides this barley announcement, China also resumed Australian coal imports in January.

The Chinese Ministry of Commerce "has ruled that it is no longer necessary to continue to impose anti-dumping duties and countervailing duties on imports of barley originating in Australia in view of changes in the Chinese barley market," it said in a statement Friday. No further details on these changes were provided.

In April, Australia agreed to "temporarily suspend" its World Trade Organization complaint against China for its 2020 decision to impose 80.5% duties on Australian barley, paving the way for Beijing to expediate its review of the tariff decision. These tariffs were slated to expire next week.

Farrell, Wong and Watt said they expect a similar process for the removal of duties on Australian wine. In March 2021, China introduced a crushing five-year tariff of up to 218% on Australian wine.

Australia is one of the few developed nations on Earth that exports more into China than it imports from China. Their bilateral relationship deteriorated after Australia supported a call for an international inquiry into China's handling of the coronavirus pandemic, which was first reported in the Chinese city of Wuhan. 

The move will also likely open up another source of barley imports for China, which would ease concerns about food price inflation emanating from Russia's withdrawal last month from a landmark agreement known as the Black Sea Grain Initiative.

Over the last year, the agreement facilitated the passage of more than 1,000 ships carrying nearly 33 million metric tons of Ukrainian wheat, barley, corn and sunflower meal.

China, one of Moscow's closest strategic allies and the world's second-largest economy, was the indisputable top recipient of Ukrainian agricultural products — including about a quarter of outbound barley volume, according to data provided by the United Nations Thursday.

The United States and its Western allies are looking to China to help resolve the calamitous domino effect of Russia's exit from the crucial U.N.-backed agriculture deal.