Australia has confirmed it is actively considering taking China to the World Trade Organisation over its barley tariffs, two days after the communist nation effectively shut Australian winemakers out of its lucrative domestic market.

China's decision to impose steep tariffs on wine exports follows a string of adverse trade actions this year that have highlighted damaging tensions between Canberra and Beijing.

Tariffs were placed on barley exports earlier this year - affecting grain prices for what is expected to be a bumper crop - and producers of beef, lobsters, timber and coal have also been hit.

Trade Minister Simon Birmingham said earlier this week the new tariffs of between 107 and 212 per cent were a "devastating blow" to the wine industry and "incompatible" with China's free trade commitments.

He revealed on Sunday the government was "actively discussing" with the grain industry whether to take China to the WTO over the trade dispute.

"There are different opinions to be quite frank there. But on the whole, Australia stands by the rules-based system for international trade," Mr Birmingham told ABC's Insiders.

"If we stand by the rules based system, you should use that rules-based system, which includes calling out when you think the rules have been broken and calling in the international umpire to help resolve those disputes.

"We are calling them out through the WTO, whilst also still using all of those processes in the Chinese system to try to resolve them, but ultimately, these are Chinese decisions, China has chosen to apply them on Australia, and only China can choose to reverse them."

Mr Birmingham said Australia would see how China's anti-dumping investigations played out before raising the wine dispute with the WTO.

Mr Birmingham stopped short of saying China was engaging in "economic coercion" when asked by host David Speers, saying he did not want to "escalate" the situation.

‘I think around the world people are posing that question,’ Mr Birmingham said when asked if China was engaging in ‘economic coercion’. Picture: ABC
‘I think around the world people are posing that question,’ Mr Birmingham said when asked if China was engaging in ‘economic coercion’. Picture: ABC

"Is your view now that this is economic coercion from China? Will you call it for what it is?" Mr Speers asked.

"I think around the world people are posing that question," Mr Birmingham answered, saying it was for Chinese authorities to explain.

He said Australia has "not changed" in its support for free trade in line with the international norms both Australia and China had committed to.

"We see, though, the fact that China, with the welcome rise of its economy, has also become more assertive in other ways," he said.

"What we want to see is that assertiveness channelled into good, into engaging in ways with the rest of the world, that helps to drive economic growth rather than dampens it."

Barley is among the Australian industries hit hard by Chinese trade decisions in 2020. Picture: Zoe Phillips
Barley is among the Australian industries hit hard by Chinese trade decisions in 2020. Picture: Zoe Phillips

Mr Birmingham rejected the notion that Australia's rhetoric and actions in calling for an investigation into the Chinese origins of the virus, and trumpeting its military agreement with Japan had been "over the top".

The recent defence agreement with Japan was negotiated over "many years" and not connected with China, he said.

Treasurer Josh Frydenberg also declined to comment on whether China's aggressive tactics amounted to "economic coercion" when asked on Sunday morning.

"We are not going to escalate this trade challenge," Mr Frydenberg told reporters in Melbourne.

"What we will do is engage, as best we can, to make our case for why this trade should continue with China, whether it is in wine, barley or coal.

"There have been well known disputes and we would like to see the trade relationship return to where it was, which was a mutually beneficial one in the interest of China and of Australia."

Scott Morrison acknowledged the fraught nature of the relationship between the two countries in a Sunday morning radio interview.

"It is a difficult time and there are tensions and … Australia is no stranger to that," the Prime Minister told ABC radio.

He cited issues from the European Common Market in the 1970s and the later resources bust as examples of challenges Australia had weathered.

"All of these things economically have caused shocks to the system and what's quite amazing about Australia and particularly those who work in our ag sector, is how resilient they are to, obviously, weather and climate; but also, they have had to deal with these things in the past as well," Mr Morrison said.

"You can't control everything in this world, but one thing you can control is who you are and your values and the things you know are important and remain steadfast with that.

"We'll do everything we can to ensure that we can try and address these trade issues that have come up with China."

The PM said he was focused on signing new trade agreements with the European Union and the UK.

"We've been working very hard on expanding trade opportunities and even a sector like wine, which is obviously impacted by this decision, the great thing about everything we make and produce here is it's really, really good and that's its best advocate, and we've got to keep focusing on the quality and keep expanding our trade opportunities."

Originally published as Australia set to fight back against China



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