Australia Elevates Barley Dispute With Beijing to WTO

The World Trade Organization. Martin Good/Shutterstock.com

Australia has elevated its dispute with China at the World Trade Organization (WTO), calling for a panel to be established to address Beijing’s punitive tariffs on Australian barley exports.

One expert, however, says obtaining a resolution from the WTO could be challenging, given the body has been paralysed since the Trump administration refused to appoint new members to its dispute resolution body in 2019.

Australian Minister for Trade, Dan Tehan, said the government was moving ahead with establishing a dispute settlement panel after it became clear consultations with China in late January had broken down.

“While there was constructive engagement on both sides, these consultations did not resolve our concerns,” Tehan said in a statement.

Australian Federal Trade Minister Dan Tehan at a press conference at Parliament House in Canberra on Dec. 9, 2020. AAP Image/Lukas Coch

“The WTO, dispute settlement system, is designed to allow Members to settle their differences over trade matters in a respectful manner,” he said.

“The Government is committed to defending the interests of Australian barley producers. The anti-dumping and countervailing duties imposed on Australian barley exports are not consistent with China’s WTO obligations.”

In May, the CCP imposed 80 percent worth of tariffs on Australian barley imports as part of an ongoing investigation into the alleged “dumping” of barley into the local market.

The tariffs came not long after Chinese Ambassador Cheng Jingye in Canberra warned of potential economic sanctions against the country following calls by Foreign Minister Marise Payne to investigate the origins of COVID-19.

The trade strikes swept up a wide array of export industries, including beef, wine, lobster, timber, lamb, coal, and cotton.

Cooked lobsters for sale in the auction house at the Sydney Fish Market in Sydney, Australia, on Dec. 23, 2014. Peter Parks/AFP via Getty Images

Australian officials tried for months to negotiate but were unable to get in contact with their Chinese counterparts.

In December, former Trade Minister Simon Birmingham announced Australia would launch an official dispute via the WTO.

How the WTO Process Works?

The WTO dispute resolution process has three stages: consultation, the panel, and finally, an appeal.

The consultation process, which has a 60-day time period, was wound up in late January. The next stage sees the convening of a panel to oversee and investigate the dispute.

Representatives from Australia and China will present arguments to the panel, as well as Canada and Russia, who joined the dispute in late January concerned over how a ruling could potentially impact global barley markets.

Farmer John Magill inspects a dead Barley crop in Parkes, Australia, on his farm on Oct. 25, 2006. Ian Waldie/Getty Images

The panel will conclude with an interim and final report presented to the Dispute Settlement Body for a formal ruling. If the ruling is in Australia’s favour, Beijing will either need to remove the barley tariffs or negotiate a compensation payout to Australia.

Failing this, Australia could be granted permission by the WTO to retaliate.

The entire process could extend over a 12 to 18-month process.

China or Australia will still have an option to appeal to the final Appellate Body. The seven-member Appellate Body has the power to “uphold, modify or reverse” the panel’s findings.

However, while that is the theory, the current reality is far different.

“In practice, the appeals process has been frozen for more than a year now,” Professor Peter Draper, executive director at the Institute for International Trade at the University of South Australia, told The Epoch Times.

In 2019, the Trump administration decided against appointing new members to the Appellate Body over a host of issues with the WTO, including judicial overreach by its members, consistent rulings against U.S. tariffs designed to protect American businesses, and slow decision making.

In turn, the Appellate Body cannot hear appeals because it lacks the numbers to constitute a body.

A picture taken on Jan. 24, 2020, shows a general view at the opening of a World Trade Organization (WTO) ministerial meeting on the sideline of the World Economic Forum annual meeting in Davos. Fabrice Coffrini/AFP via Getty Images

Draper said any final ruling handed down in the current Australia-China dispute could be “appealed into the void” by either party.

“You know that there’s no appellate body, but you just appeal it anyway. And effectively, therefore, you kill the dispute.”

An alternative body was set up after the WTO Appellate Body was frozen, called the Multi-Party Interim Appeal Arbitration Arrangement (MPIA), of which China and Australia are signatories.

However, both parties must be willing to submit to an MPIA ruling, which could be another means to effectively “kill” the case.

Where Does This Leave Australia?

“I think you'd have to go back to what Australia’s motivations and bringing this case are, and I think the fundamental motivation is to highlight the importance of the rule of law procedures, international rule of law procedures,” Draper said.

“Where better to do this than in the apex global trade body the WTO? In other words, the signals that China sends in how it responds will be watched by the entire membership,” he said.

The World Trade Organization (WTO) headquarters in Geneva on April 12, 2018. Fabrice Coffrini/ AFP/Getty Images

“The process, and the issuance of the reports, will be illuminating. As they say, ‘sunlight is the best disinfectant.’ I think that’s what the Australian government is aiming for in this case.”

Despite bilateral relations with China souring over the course of 2020, the Australian government has refused to engage Beijing in tit-for-tat diplomacy and has instead focused on shoring up its national security, diversifying trade relationships, and emphasising the need to fortify the international rules-based order.