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Weihuan Zhou

China’s landmark investigations into Australian barley led to the imposition of “anti-dumping” and “anti-subsidy” tariffs of 80.5 per cent in May, threatening an Australian export market worth $A600 million (US$412 million) a year.
China says it made its own calculations on the extent to which Australia subsidised barley after Australian authorities failed to give it all the information it needed in the form it requested.
It set out its findings on subsidies in a report at present only available in Chinese.
One finding was that Australian officials “did not comply” with its requirements in relation to the Sustainable Rural Water Use and Infrastructure Programme. Australia disputes that conclusion.
Is the silent treatment part of China’s new art of war with Australia?
At first glance the possibility that Sustainable Rural Water Use and Infrastructure Programme could have had anything to do with subsidising barely exports seems baseless.
The Murray Darling Basin Plan, of which the Sustainable Rural Water Use and Infrastructure Programme is a part, is a long-running programme aiming to remedy a century of over-exploitation of water.

It includes no discussion of production targets, export volumes or anything else that might be expected to set off trade alarm bells.
Plan more than environmental
But the plan and its A$13 billion (US$8.9 billion) budget is about more than the environment.
It originally prioritised the environment, but in 2010 its goal was explicitly changed to address a triple bottom line of economic, social and environmental concerns.
From there, its management became a major economic and political issue.
Scandals surround huge payments for dubious water rights, infrastructure spending that doesn’t actually save water, and massive subsidisation of irrigation expansion into areas that were not previously irrigated.
Stories abound of favoured companies or regions reaping large windfalls at the expense of taxpayers, other farmers, the environment, or all three.
‘No trade war’ with China, says Australia, despite barley tariff escalation
Administered with ‘habitual’ secrecy
Australia’s Department of Agriculture says the government fully engaged with China’s investigation, “including providing extensive information on production and commercial information on the Australian barley industry”.
But the department hasn’t always been forthcoming about its operations.
A South Australian Royal Commission concluded that its claim to be committed to engaging in public debate and open dialogue should be regarded with “deep suspicion”.
The separate Murray Darling Basin Authority operated with “an unfathomable predilection for secrecy”.
The behaviour was “habitual”, in the assessment of the Royal Commission.

We might have given China a case
Even if Australian officials did participate in the Chinese investigation in good faith, the potential for confusion is considerable given the jargon that engulfs both water management and trade law.
Few water managers speak trade law and equally few trade lawyers understand the jargon of the Murray Darling Basin Plan.
From a trade law perspective, although the Sustainable Rural Water Use and Infrastructure Programme and the Basin Plan do not explicitly subsidise exports, the fact that much of the Basin’s produce is exported means it could be argued that they distort trade.
It is open to a country such as China to take action if the programme has conferred benefits to an Australian industry and the subsidised exports have caused a material injury to a competing domestic industry.

China alleges this is the case for barley, but a stronger case could perhaps be argued for the Basin’s bigger export crops: cotton, almonds and walnuts.
Part of the reason is that the programme involves government spending, but it is possible to argue that the implementation of the Basin Plan has also subsidised exporters in another way, by environmental mismanagement.
The Barwon-Darling has been described by environmental regulators as “an ecosystem in crisis”. Contributing to the crisis has been a system that allocates scarce water to irrigators and diverts huge volumes of floodwater into private dams.
China-Australia spat could push up prices in world’s largest beer market
This arguably illegal practice of “floodplain harvesting” provides huge benefits to cotton exporters.
It is uncertain whether China’s barley decision will bring about changes to Australian water management that downstream communities, irrigators, Indigenous nations and environment groups have long called for.
It would help if water regulators explained what they were doing in terms that can be understood by ordinary Australians and Chinese trade experts alike.
Contributing to this article were Maryanne Slattery, a former director at the Murray Darling Basin Authority and a director of water consultancy Slattery Johnson, Rod Campbell, Research Director at the Australia Institute and Allan Behm, director of the Australia Institute’s International and Security Affairs programme.

This article is republished from The Conversation under a Creative Commons licence. Read the original article.



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Australia

Why China believed it had a case to impose tariffs on Australian barley

A barley harvest. China said its investigations had proven the dumping of cheap Australian barley had hurt its domestic market. Photo: Getty Images

TO GO WITH Australia-drought-commodities-wheat,FEATURE by Madeleine Coorey. This photo taken 12 November, 2007 shows a dry and stunted barley crop being prepared for harvesting on the property of farmer Paul Rout at Grenfell in the central west of New South Wales. Much of Australia is suffering the worst drought in living memory, with many farmers experiencing their second failed crop in a row. AFP PHOTO/Greg WOOD (Photo by GREG WOOD / AFP)

Shutterstock ID 311917199 generic Australia/China pix

A stock pile of barley sits under a tarpaulin, prior to being loaded onto trucks and transported to a port for shipping, at a grain facility in Balliang, Victoria, Australia, on Monday, May 18, 2020. China slapped anti-dumping duties on Australian barley for five years as diplomatic tensions escalate between the two trading partners. Australia's biggest customer for the grain will impose an anti-dumping duty of 73.6% and an anti-subsidy duty of 6.9%, effective from May 19, according to a statement from China's Ministry of Commerce late Monday. Photographer: Carla Gottgens/Bloomberg

Australia rules out trade war retaliation with China despite barley tariff escalation

China is Australia’s largest barley market. Photo: Reuters

China is Australia’s largest barley market. Photo: AFP

China confirms over 80 per cent tariff on Australian barley exports

At the start of the investigation in November 2018, Chinese authorities suggested an anti-dumping tariff of 56.14 per cent but that was subsequently raised to 73.6 per cent. Photo: AFP

China has alternatives for beef, barley imports but trade dispute could ‘kill Australian farmers’

Breweries in China import some of their barley from Australia. Photo: Reuters

China has suspended beef imports from four major Australian meat processing plants. Photo: AFP

China’s restrictions on Australian beef, barley seen as retaliation for support of coronavirus investigation

Australia’s beef trade with China accounts for 20 per cent, with 300,000 tons sent to China last year. Photo: AFP

The A$1.3 billion (US$846 million) barley trade to China accounts for around half of Australia’s barley exports. Photo: AFP

China’s silent treatment for Australia in beef, barley trade row viewed as new normal under ‘Wolf Warrior’ diplomacy

Australia is the world’s most China-dependent economy with around 32 per cent of its exports going to China. Photo: AFP

Australian Trade Minister Simon Birmingham has expressed his disappointment at not being able to speak with Zhong Shan despite trying several times to place a call with his Chinese counterpart. Photo: Getty Images

This Week in Asia

Opinion


China has set out its reasons for imposing tariffs on Australian barley imports in May
One of the findings was that Australia did not comply with its requirements on sustainable rural water use



China found that Australia did not comply with its requirements on sustainable rural water use, which Canberra disputes.


China-Australia relations

Trade

China trade

US-ally trade wars

Expresses the views, ideas and conclusions of the author. (Eg. Enough of Crazy Rich Asians, think of crazy poor Hongkongers.)


Opinion | Why China believed it had a case to impose tariffs on Australian barley

China has set out its reasons for imposing tariffs on Australian barley imports in May One of the findings was that Australia did not comply with its requirements on sustainable rural water use

China has set out its reasons for imposing tariffs on Australian barley imports in May

One of the findings was that Australia did not comply with its requirements on sustainable rural water use