New Zealand has announced it will support Australia in its World Trade Organisation (WTO) dispute against tariffs placed on Australian barley by China.
The dispute follows Australia's claims that China breached international trading rules last year when it placed an 80% import tariff on Australian barley. According to Australia, the tariffs were implemented as a response to Australia's calls to investigate the origins of COVID-19.
Australia has since taken the dispute to the WTO, which agreed on Friday to form a panel to settle the claims. This is the first step towards settling a dispute with the WTO.
China claims it imposed the tariffs after Australia dumped barley in China. Dumping in international trade is when a nation exports a product for less than it costs in its home country. To dump product is defined as anti-competitive behaviour by the WTO.
Australia denies that it dumped barley in China.
New Zealand's Trade Minister Damien O'Connor told local media the country would support Australia in its WTO panel dispute ahead of Prime Minister Scott Morrison's arrival in New Zealand yesterday.
O'Conner was quoted by New Zealand's Newshub as saying:
New Zealand upholds international rules and norms, so ensuring international trade rules are fairly applied by others is important to us and our exporters.
Australian's Trade Minister Dan Tehan welcomed New Zealand's support for the rules-based trading system, according to ABC News.
Australia has also accused China of imposing unfair import tariffs on Australian meat, lumber and lobsters. And market watchers will likely remember the effects said tariffs had on ASX-listed Treasury Wine Estates Ltd (ASX: TWE). Currently, only the tariffs on barley have been taken to the WTO.
Let's take a look at the ASX share that could be one to watch through the row.
ASX-listed barley producer
Graincorp Ltd (ASX: GNC)
Graincorp is one of the few ASX-listed companies that deals with barley exports. Its exposure to the trade rift is somewhat limited as only a small amount of the company's activities involve barley exports. However, its share price could be in the spotlight while Australia and China battle it out on the WTO stage.
Prior to the trade dispute between Australia and China, the company claimed to have very close ties with China. China's grain demands are also vast, and still growing, making it an ideal market that Australian industry is currently missing out on. A settlement to the dispute could have ramifications for companies such as Graincorp.
Currently, the Graincorp share price has gained 27% since the barley tariffs were first imposed last year. It's also 17% higher than it was at the start of 2021.
