By Elishya Perera
SYDNEY, Australia (CWBN)_Australia is reportedly ready to initiate its first litigation against China at the World Trade Organisation, regarding recent tariffs on barley exports.
In November 2018, the authorities in Beijing initiated an anti-dumping probe into Australian barley, which examined whether barley was from Canberra was exported at a price lower than the price in the domestic market, as a result of subsidies or tax benefits provided by the Australian government.
After an 18-month investigation, the Ministry of Commerce in Beijing ruled that both dumping and subsidisation had occurred, and in May this year, the authorities imposed a combined 80.5% tariff on Australian barley, which will last for five years.
Accordingly, earlier this month, the Federal Government of Australia confirmed that it will appeal to the World Trade Organization (WTO) over China’s decision, marking the first time Canberra refers Beijing to the independent umpire over an agricultural commodity.
However, WTO litigation is no quick fix. The process moves through three phases, namely consultation, adjudication and compliance.
Ideally, the standard timetable requires disputes to move through consultation and adjudication within a year, although in reality, it often take several years. The adjudication process usually involves a decision by a WTO panel, which may be appealed to the organisation’s Appellate Body. Here too, while the WTO panel is expected to issue its decision within 9 months, and the Appellate Body is meant to make its decisions within 90 days, however, these time frames are not met in many cases.
China’s tariff on Australian barley comprised of a 73.6% anti-dumping duty and a 6.9% countervailing duty. Although Australian Federal Trade Minister Simon Birmingham has expressed confidence in Australia’s “strong case”, the WTO ruling requires detailed examination of its methodology, which involves highly technical calculations.
On the other hand, even if the World Trade Organisation rules in favour of Australia, a “win” isn’t total. The WTO ruling would only require the losing state to change their ways, and does not involve compensating those who were harmed by illegal trade measures. In other words, a win for Australia may require Beijing to only remove the tariff, not compensate those who paid more or lost revenue as a result.
Nevertheless, a formal resolution is an important step in the right direction. It initiates a structured process for dialogue, which is imperative as Beijing has continued to disregard Australia’s expression of willingness to formally discuss and resolve these trade disputes. These talks could also help repair communication channels between the two trade partners, better than missives through social media and press conferences.
More importantly, a formal resolution conveys a firm and dignified message regarding Australia’s willingness to use international rules and procedures to solve grievances.
As China and Australia is in dire need for a relationship reset, meeting in a rules-based forum with structured processes for dialogue is an important first step to achieve this objective.
