SINGAPORE – Australia wants talks with China to resolve their trade dispute and clear up any dispute with its largest trading partner, Australian Agriculture Minister David Littleproud told CNBC on Friday.
Two Australian cotton industry groups say China has begun to curb spinning mills from using cotton imported from Down Under.
“It is clear to our industry that the National Development Reform Commission in China discourages their country’s spinning talents from using cotton in Australia,”; said Adam Kay, CEO of Cotton Australia, and Michael O’Rielley, head of Australian Cotton Shippers Association, said in a statement.
China’s Ministry of Commerce has not yet officially responded.
Littleproud told CNBC’s Will Koulouris that he would write to his Chinese counterpart to clarify the situation.
“I think it is important that we get clarification before we jump on it. That is why we are working with industry and Beijing to make sure we get some answers,” he said.
Two years ago, China added nearly 800,000 tonnes to additional cotton import quotas subject to a sliding duty to meet the demands of the textile industry, according to a report by the Department of Agriculture. United States.
Under Beijing’s commitments to the World Trade Organization, that means China is obligated to annually allocate 894,000 tonnes of cotton imports subject to a 1% import tariff, the US report said since 2018. Any import above the quota will have a 40% duty and cannot be done commercially for exporters given market prices.
“We are concerned that there are reports that Chinese officials are telling millers not to give Australian cotton a chance to participate in that initial quota,” Littleproud told CNBC, adding that the industry is working to ensure that there are alternate markets available.
“Thus, Indonesia, Vietnam, and India are all taking up significant portions of our cotton crop,” he said, referring to an independent trade agreement with Indonesia that was ratified a few months earlier.
Souring trade relations
Residential buildings and houses will be located in the background of the Sydney Harbor Bridge and Sydney Opera House in Sydney, Australia, on Saturday, January 12, 2019.
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China is Australia’s largest trading partner in goods and services and accounts for almost 27.4% of Australia’s world trade, according to the Australian government. In 2019, trade between the two countries reached a record 252 billion Australian dollars ($ 178.5 billion), up 17.3% year-on-year. Australia and China signed a free trade agreement starting December 20, 2015.
Littleproud set up a short-term subsidy for farmers but said the Australian government was working to ensure they had a chance to spread their risk.
“We told our exporters if they were caught with wine, barley, we have provided up to 14 free trade agreements worldwide and are giving you the opportunity to spread that risk. It was a commercial decision for us. exporters in every industry to make that decision, “he said.
“So obviously, they will conduct assessments around the risks of trading in China, because obviously that is another simple business principle, the greater the risk, the more reward you seek,” Littleproud added.