In what could be an early sign of relief for Australian alcoholic drink exporters, the China Alcoholic Drinks Association has recently called for steep tariffs on Australian barley to be lifted, as the production cost of beer manufacturers have soared due to global supply disruptions while at the same time domestic production has also halved.
In a formal application, the Association argued that major changes had taken place in China’s domestic barley market since the tariffs were imposed in 2020 and anti-dumping measures were no longer necessary. It said imported barley prices had soared due to the COVID-19 pandemic and the war in Ukraine, while domestic malting barley production had halved from more than 2 million tonnes in 2009 to less than 1 million tonnes. As such, domestic supply of barley is unable to meet industry demand.
There is a high chance that China’s Commerce Ministry could lift the tariffs, as the Association was also the same influential body that initiated the anti-dumping investigation into Australian wine.
The Association also noted in the application that Australia accounted for up to 70% of China’s total barley imports before the tariffs were imposed. Since then, there had been shifts to importing barley from Canada, France and other countries which were bought at prices 53% higher than in 2020. Not only that, supply is also unstable and subject to freight and currency fluctuations.
China imported more than 80% of its barley for production. A favourable outcome in this episode could also translate to possibly resolving Australia-China trade frictions which also involve tariffs on wine and other food products.
Meanwhile, despite the ongoing tariffs on wine, Australian wine producers have been receiving many queries from Chinese buyers to import their wine products into China. According to several wine suppliers, the Chinese counterparts are confident that the wine trade will resume soon between the 2 countries. “They seem to be making early preparations before the China market open again,” said an Australian wine producer. Many are expecting the wine tariffs to be removed or at least reduced by the end of the year just before Christmas.