China has asked for an extra month to decide whether to scrap hefty tariffs on Australian barley, dashing hopes of an imminent breakthrough in one of the biggest trade disputes between the two countries.
The Albanese government said it was disappointed by the delay, and warned that it was ready to revive its case at the global trade umpire, the World Trade Organization, if Beijing doesn’t scrap the measure by August.
A failure to reach a deal would also be a setback for Australian wine exporters, because the government had hoped the barley review would end up being a “template” to end similar imposts on that sector.
China imposed tariffs of 80.5% on Australian barley at the height of diplomatic tensions in 2020, wiping out a trade previously worth $1.2bn a year.
Tuesday marked the end of the three-month period in which China was to reconsider its barley tariffs in return for Australia agreeing at the eleventh hour to suspend its challenge at the WTO.
China and Australia have notified the WTO dispute panel that they have agreed to extend the suspension by one month to 11 August.
But a spokesperson for the foreign affairs minister, Penny Wong, and the trade minister, Don Farrell, indicated that Australia would grant no further extensions.
“The Australian government has been clear in our view that there is no justification for these duties and that it is in both countries’ best interest for all trade impediments to be removed,” the spokesperson said.
“While we are disappointed China’s review could not be completed within the initial three months, we remain hopeful the impediments will be lifted in the near future.
“If the duties are not lifted at the end of the four-month period, Australia will resume the dispute in the WTO.”
If Australia revives the WTO challenge, it won’t have to start from scratch because the process will resume at the point at which it was frozen. The dispute panel’s final report had been imminent.
Under the deal announced in April, China’s commerce ministry committed to an “expedited” review of the barley tariffs – a potential offramp for Beijing to scrap the measure without risking a negative WTO ruling.
While Wong and Farrell had said that the review might possibly spill over into a fourth month, the delay is seen as a setback given that their government has been pushing for tangible progress on the trade disputes.
The government has been seeking improved conditions for a possible visit to China by the prime minister, Anthony Albanese, although reports this week suggested the trip could be delayed until next year.
Since coming to power, Labor has sought to “stabilise” the relationship with Australia’s largest trading partner, including by promising a change of “tone” and seeking dialogue.
China has takensteps to ease tensions over the past six months, such as resuming imports of Australian timber, coal and stone fruit.
Thoroughbred Breeders Australia said last week it had been notified that China had begun issuing import permits for Australian horses for the first time since 2019.
Australian barley, wine, seafood and red meat remain subject to restrictions.
Hong Kong’s decision to issue arrest warrants for one Australian citizen and one Australian resident over alleged breaches of the territory’s sweeping national security law have further strained the relationship.
Before the barley extension was confirmed, the opposition’s trade spokesperson, Kevin Hogan, said: “The only reasonable and acceptable resolution from the review process is the complete and unconditional lifting of the tariff on barley.”