Conflict Alerts

Conflict Alerts # 89, 13 May 2020

China-Australia trade tensions escalate over import barriers on agricultural goods
Aarathi Srinivasan

In the news

The bilateral relation between Australia and China has reached a new low over two incidents of import suspension and tariffs. On 12 May, China suspended imports of red meat from four Australian abattoirs over labelling and health certificate requirements. The import suspension follows another move by China wherein it threatened to slap a dumping margin of up to 73.6 per cent and a subsidy margin of up to 6.9 per cent on barley imports from Australia. 

The Australian Prime Minister Scott Morrison has asked Beijing to address this issue based on whether it is an anti-dumping issue from the Chinese perspective. China is expected to reveal its anti-dumping investigation findings on Australian barley exports by 19 May. 

Issues at large

The tariffs and import suspension from China have come at a time when Australia has been pushing for a global inquiry into the origin of the COVID-19 pandemic. The retaliation by China can be understood under three issues. First, the levy of the tariff has worsened the relationship between China and Australia to the extent that besides crippling the agriculture industry, it has led to bitter tiff in their political relation amid the pandemic. The diplomatic relation has already deteriorated since China has become more aggressive in stopping the inquiry on the virus.

Second, China's retaliation to boycott wine and beef is interpreted by the Australian officials as an attempt to economically coerce and affect the movement of goods and people at a time when the country is facing the impacts of slow economic growth. 

Third, the barley export to China has reduced by half in the previous year following China's anti-dumping policy. An increase in the import tariff to 80 per cent can now completely halt agricultural trade between the two countries altogether, affecting the farmers severely.

In perspective

The pandemic has brought trade to a standstill, but Australia may still maintain a positive trade balance with China because of the latter's dependency on coal and iron ore. The pandemic is expected to drain the economy, and hence bilateral trade will become an integral part to revive the global economy.

At the same time, a prolonged tiff can affect the primary produce and consumer goods market in Australia. It will also have a huge impact on the development of the Asia Pacific region. It is also important for Australia to strengthen its position in the international forum in order to navigate between the US and China so as to maintain friendship and trade partnership, respectively.

Aarathi Srinivasan is a Research Intern at the National Institute of Advanced Studies (NIAS). The author is pursuing a Masters in International Studies from Stella Maris College, Chennai. 

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