China has announced the lifting of tariffs on Australian barley imports, effective from August 5th. This decision signifies an improvement in bilateral relations and will address supply concerns following Russia’s suspension of a humanitarian corridor for essential Ukrainian grains. The tariffs, which were imposed during heightened diplomatic tensions in 2020, covered various Australian exports, including wine, red meat, lobsters, timber, and barley. In addition to the recent barley announcement, China had already resumed coal imports from Australia in January.

The Chinese Ministry of Commerce stated that the change in the Chinese barley market no longer necessitates the continuation of anti-dumping duties and countervailing duties on Australian barley imports. However, no specific details regarding these changes were provided in the statement.

In April, Australia agreed to temporarily suspend its complaint against China at the World Trade Organization, allowing Beijing to expedite its review of the 80.5% duties imposed on Australian barley in 2020. These tariffs were set to expire next week.

Australian Trade Minister Don Farrell, Foreign Minister Penny Wong, and Agriculture Minister Murray Watt expressed their satisfaction with the outcome, as it allows Australian barley exporters to re-enter the Chinese market, benefiting both Australian producers and Chinese consumers. They also confirmed that Australia will discontinue its legal proceedings at the WTO following the removal of these duties.

The Australian ministers mentioned that they anticipate a similar process for the removal of duties on Australian wine. China had imposed a five-year tariff of up to 218% on Australian wine in March 2021. The bilateral relationship between Australia and China deteriorated after Australia supported an international inquiry into China’s handling of the COVID-19 pandemic, which originated in Wuhan.

This development is expected to provide an alternative source of barley imports for China, alleviating concerns about food price inflation caused by Russia’s withdrawal from the Black Sea Grain Initiative agreement last month.

Under the Black Sea Grain Initiative, more than 1,000 ships transported nearly 33 million metric tons of Ukrainian wheat, barley, corn, and sunflower meal over the past year. China, as one of Moscow’s closest strategic allies and the world’s second-largest economy, was the primary recipient of Ukrainian agricultural products, including a significant portion of the outbound barley volume.

Given Russia’s exit from this crucial U.N.-backed agriculture deal, the United States and its Western allies are seeking China’s assistance in resolving the resulting domino effect.