Australia & China: Australia’s WTO case against China barley ban hits a roadblock

Australia’s government has hit a roadblock in its bid to haul China over the coals at the World Trade Organisation for Beijing’s ban on Australian barley exports, after the push became collateral damage in a spat between the US and Venezuela, The Australian Financial Review reported on March 28.

The WTO’s dispute settlement body (DSB) was due to hold a meeting on March 26, at which Australia was scheduled to formally lodge its complaint against China for imposing anti-dumping measures against Australian barley imports.

But the meeting was unexpectedly thrown into limbo after Venezuela reheated a two-year-old feud with Washington over US trade sanctions against President Nicolas Maduro’s regime.

Venezuela’s attempt to launch a dispute “panel” over the US sanctions prompted American diplomats in Geneva to block the whole DSB meeting from taking place.

Last time Venezuela and the US clashed at the WTO within the DSB, its meetings were suspended for a month.

A panel to settle the Australia-China barley dispute would take many months to reach a conclusion, so the delay is not expected to derail Trade Minister Dan Tehan’s move against Beijing.

But if the Venezuela-US impasse is prolonged, he may have to seek alternative ways of pressing ahead with the WTO case against China, potentially taking the unusual step of convening a special meeting.

Chinese officials last year imposed anti-dumping and anti-subsidy duties totalling 80.5 per cent on Australian barley, claiming a flood of cheap exports were undercutting domestic producers.

The decision wiped out a market worth A$600 million annually for Australian growers, though some have managed to shift their crop to Mexico, the Middle East and south-east Asia.

China’s barley salvo was part of a broader campaign of tariffs or import bans on a host of Australian commodities, which began after the Morrison government took a leading role in calls for a global inquiry into the origins of the coronavirus pandemic.

Affected sectors have included wine, coal, timber and lobsters, but barley is the only one Australia has so far taken to the WTO.

“The anti-dumping and countervailing duties imposed on Australian barley exports are not consistent with China’s WTO obligations,” Mr Tehan said in mid-March when he announced the plan to request a WTO dispute panel.

Venezuela was seeking to use the March 26 meeting to establish a dispute panel on US sanctions, saying they were illegal under WTO rules.

The US refused to accept the establishment of this panel, saying that allowing it would be “tantamount to recognising the Maduro regime itself”.

Because the two sides could not agree, the agenda of the DSB meeting was not agreed – which meant the meeting itself could not proceed.

It was unclear why Venezuela had sought to resuscitate the dispute, after walking away from it in 2019. One theory is that it was looking to test the resolve of the new White House administration of President Joe Biden.

US diplomats at the WTO in Geneva clearly indicated that the Biden administration would continue former president Donald Trump’s policy of recognising opposition leader Juan Guaido as the legitimate president.

The Biden team had already said, since taking office, that lifting sanctions would require Mr Maduro to initiate confidence-building measures that demonstrated a willingness to negotiate with Mr Guaido.

The fracas represents a further blow to the functioning of the WTO’s dispute resolution system, which is already dealing with a US-instigated collapse of its appeals process.

Mr Trump refused to approve any new nominations to the Appellate Body, eventually leaving it inquorate and unable to function.

Mr Biden has signalled a willingness to work more constructively on resolving the US grievance, which revolves around whether the Appellate Body has assumed too much judiciary-like power.

Britain is on March 31 hosting a meeting of G7 trade ministers, which includes the US, and which is expected to consider ways to restore and rejuvenate the disputes process.

The European Union on Friday expressed displeasure at the US move to block the DSB from meeting just because of the Venezuela request.

In a statement to the WTO, Brussels said it was concerned at “the DSB being prevented from holding its meeting on all items of today’s agenda, simply because that agenda is not adopted”.

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