China links Australia barley tariffs to past trade disputes

Beijing/Canberra | The Chinese government has linked steep tariffs on Australian barley to past trading disputes, saying it had only launched one remedy investigation in almost 50 years compared with 100 probes into goods from China by Australia in the same period.

Commerce Minister Zhong Shan said late on Monday that Beijing had been "cautious and restrained" in its trade remedy measures against Australia since the coronavirus outbreak, but noted Australia had launched more cases against China.

Trade Minister Simon Birmingham on Tuesday rejected the thrust of his Chinese counterpart's criticism, saying it was not about doing things "tit-for-tat".

Mr Zhong's comments were the first by China's top official on trade with Australia since Beijing imposed restrictions on beef and barley imports after the Coalition government called for an international probe into the the origins of coronavirus. Mr Zhong refused to take calls from Senator Birmingham after the restrictions were imposed.

"China has been cautious and restrained in taking trade remedy measures," he told reporters on the sidelines of China's National People's Congress (NPC) meeting in Beijing.

"China has launched only one trade remedy investigation in Australia since the two countries established diplomatic relations [in 1972], and this is the anti-dumping and anti-subsidy case on Australian barley.

"Meanwhile, Australia has launched 100 trade remedy investigations into China. Despite the epidemic outbreak, Australia has launched three probes into China this year. By comparison, China hasn’t launched any trade remedy investigation in any country this year," Mr Zhong said.

He did not detail the cases Australia had launched into China this year. It is believed the last Australian government action against China was in July last year in a case relating to railway wheels. It is believed Mr Zhong could have been referencing anti-dumping investigations sought by companies in Australia.

"Well this isn't about keeping a tally or about doing things in a tit-for-tat way," Senator Birmingham told Sky News.

"Each country has its own anti-dumping system. Anti-dumping systems are there to prevent goods from being dropped in a market at below cost value and therefore distorting that market and driving local producers out of business.

"Yes, Australia has an anti-dumping system that we use, and our decisions are open to appeal through the World Trade Organisation. China's not chosen to do that with any of our decisions to date, but it remains their right to do so. "

Mr Zhong's comments appear to back suggestions that Beijing may have taken the move in response to Australia's aggressive use of anti-dumping measures against China's steel and aluminium producers in the past.

Behind the scenes, the federal government believes China's decision to take action on barley was partly linked to Canberra's 5G network ban on Huawei. In then went ahead with the punitive tariffs in retaliation for the coronavirus probe call.

Trade experts have said the action was less about local market conditions and more about Beijing punishing Australia for levying duties of between 15 per cent and 102 per cent on Chinese makers of steel and aluminium.

Mr Zhong defended the anti-dumping tariffs imposed last week, saying the decision was based on World Trade Organisation rules and Australia's actions had brought "material injury" to its domestic industry.

"We have found out that Australia has subsidised the grain, and there has been dumping in the Chinese market which caused damage to local producers," Mr Zhong said.

In an interview with The Australian Financial Review last week, Senator Birmingham acknowledged that China had long complained to Australia about the tariffs imposed on its steel, but said that should be no excuse for Beijing's decision to target Australian barley.

The 100 cases Mr Zhong referred to had taken place since 1972, when diplomatic ties between Australia and China were established.

The move on barley – followed by restrictions on some Australian beef – has raised concerns China will punish Australia economically for its stance on the coronavirus probe, along with other past grievances. More restrictions on other Australian exports to China are expected.

China has officially denied any links between the barley and beef restrictions and politics.

China also criticised Home Affairs Minister Peter Dutton for calling its Belt and Road infrastructure initiative a "propaganda exercise" in remarks related to Victoria's support for the project.

"The groundless accusations made by some Australian politicians are totally untenable. They only expose their negligence of the Australian people’s interests and their sinister intentions of damaging China-Australia relations," a spokesperson for China's Foreign Ministry said.

China also slammed US Secretary of State Mike Pompeo's comments on Victoria's Belt and Road deal last week, saying Australia should stand up to the United States.

US ambassador to Australia Arthur Culvahouse later hosed down suggestions from Mr Pompeo that the US might "disconnect" from Australia under the Five Eyes intelligence-sharing partnership because of Victoria's participation in China's Belt and Road infrastructure program.

Australia's relationship with Beijing has become increasingly strained since the Morrison government's push for a coronavirus inquiry.