China on Friday lifted import tariffs on Australian barley from Aug. 5, a move that signals an improvement in bilateral relations and will ease supply concerns after Russia suspended a humanitarian corridor for shipments of key Ukrainian grains to global markets.

Beijing imposes import tariffs on several Australian exports, from wine and red meat to lobster and timber. In addition to the barley announcement, China also resumed Australian coal imports in January.

The anti-dumping tariffs and countervailing duties were imposed at the height of a diplomatic dispute with the then Morrison government in 2020, prompting claims of "economic coercion", although Beijing has always argued the measures were technically justified.

China's Ministry of Commerce said in a statement on Friday that "in view of the changes in China's barley market, there is no longer a need to continue to impose anti-dumping duties and countervailing duties on imports of barley originating in Australia". Namely, China's Ministry of Commerce said it would eliminate 80.5 percent tariffs on Australian barley, a measure that costs nearly $1 billion a year in lost trade. Those tariffs are scheduled to expire this week.

In a joint statement, Australian Trade Minister Don Farrell, Foreign Minister Penny Wong and Agriculture Minister Murray Watt said, "We welcome this outcome, which paves the way for our barley exporters to re-enter the Chinese market to the benefit of Australian producers and Chinese consumers to benefit."

Barry Latch, president of the Australian Grain Producers Association, said the removal of the tariffs would "allow Australian producers to restart selling and exporting our premium barley to China".

The National Farmers Union said China previously accounted for about 60 to 70 percent of Australia's barley exports.

Over the past three years, Chinese buyers have turned to Canada, France and Argentina to replace Australian barley supplies, while Australian sellers have shifted exports to supply the Middle East barley market.

These trade flows could change again after China removes tariffs, with Chinese barley buyers expected to start buying the new Australian crop harvested in October and expected to arrive by the end of the year.

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Next up: wine tariffs

Don Farrell said the Chinese restrictions, which affected about A$20 billion in annual trade as of May last year, had shrunk to about A$2 billion in exports.

"We intend to use this process (barley) as a template for resolving the wine issue, which is still ongoing ...... as we seek to resolve all these outstanding issues," Farrell said.

March 2021: China imposes draconian five-year tariffs of up to 218% on Australian wine.

Australia is one of the few developed nations on the planet where exports to China exceed imports from China. Relations between the two countries deteriorated after Australia backed an international investigation into China's handling of the coronavirus pandemic.

The move could also open up another source of barley imports for China, which would ease concerns about rising food prices triggered by Russia's withdrawal last month from a landmark deal called the Black Sea Grain Initiative.

Last year, the agreement facilitated more than 1,000 ships carrying nearly 33 million tons of Ukrainian wheat, barley, corn and sunflower meal.

China, one of Moscow's closest strategic allies and the world's second-largest economy, is the undisputed largest recipient of Ukrainian agricultural products, including about a quarter of barley exports, according to data provided by the United Nations.

The U.S. and its Western allies are seeking China's help in addressing the disastrous domino effect of Russia's withdrawal from a key U.N.-backed agricultural deal.

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