Tag Archives: External Trading / Payments

Pressured by Chinese Tariffs, Australian Farmers Are Growing New Markets | Instant News

SYDNEY – Alan Sattler had been in his tractor for three hours one morning in May, sowing hundreds of kilograms of barley seeds in Western Australia’s dry wheat belt, when he received a text message from his wheat broker. China, its biggest market, imposes punitive tariffs on Australian barley.

Mr. Sattler surveyed his 8,000 acre farm where he had grown 2,500 acres of barley. He called the broker. Now what are we going to do? Mr. Sattler pleaded, preying on his question with “a few interesting curses.”

Australian barley growers are China’s first targets in a a widespread trade dispute out for commodities including coal, grapes and rock lobster. China has been angered by Australian Prime Minister Scott Morrison’s calls for an international investigation into the first outbreak of Covid-19 in central China, seen as interference by foreign governments.

The trade dispute has hurt the country’s barley farmers, which previously exported up to 70% of their crop to China. However, the industry has largely weathered the effects of tariffs, with increased exports of barley and very few bankruptcies, suggesting that trade pressures are restricting certain industries. Many of the tactics they use to survive are now being copied by other exporters, such as Australian winemakers and salmon growers.

Market Movements

Australian barley is heading to the Middle East and Southeast Asia as sales to China dry up.

Export barley all over the world

Export barley all over the world

Export barley all over the world

Export barley all over the world

Total barley exports are expected to increase by 64% in the 12 months to October 2021. Traders have been catching up on sales in other big markets like the Middle East, although that comes with a painful trade-off: Middle Eastern consumers mostly use barley for animal feed, not for making beer, and usually pay less.

Farmers are also switching from barley to crops such as wheat, a trade that China does not dominate. They have sought a unified response, such as by supporting Australia’s challenge on barley tariffs at the World Trade Organization, to prevent divisions that China could exploit.

Barley that is harvested on Mr’s farm. Sattler. Australian farmers seek export markets outside China, such as Saudi Arabia.

Australia’s barley exports to China were worth about $ 1 billion annually before Beijing accused farmers of being subsidized to sell at unfairly low prices and imposing 80.5% tariffs, according to an analytics firm.

IHS Markit.

Many growers have poured profits into developing the barley variety that Chinese malt makers and brewers are seeking.

Other industries have also developed to feed industrialized China and its increasingly affluent middle class. China buys about 80% of Australia’s iron ore, and was a major customer of Australian wine, beef and timber before trade tensions escalated. Australia is a a popular destination for Chinese tourists and students before the pandemic closed national borders.

A decade ago, China accounted for less than a quarter of Australian exports. The share of China is now about 40%. The pandemic has increased Australia’s dependence, as China’s recovery has outpaced other major economies.

Australia is not alone in its dependence on China. In 2001, when China joined the World Trade Organization, more than 80% of countries with publicly available data recorded more trade with the US than China, according to Australia’s Lowy Institute, a foreign policy think tank. In 2018, two-thirds of countries traded more with China than the US

Beijing is increasingly using the weight of its growing economy as leverage to achieve its foreign policy goals. Over the past decade, China has used so-called coercive diplomacy 152 times, affecting 27 countries as well as the European Union, according to an August report by the Australian Strategic Policy Institute, a government-backed security think-tank. It said 113 of those cases had occurred since early 2018.

Australia’s Top Exports

China imports most of Australia’s top 10 exports.

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“The current trade disruption with China, whether related to meat, barley, lobster or wood, is not an isolated incident,” said Rex Patrick, an upper house lawmaker who is out of sync with Australia’s mainstream parties. “Rather it is a pattern of deliberate punitive action by the Chinese Communist government that puts politics above fair trade.”

Australia has been the heaviest target of China’s coercive diplomacy, ASPI said. Prior to Morrison’s call to investigate the origins of the pandemic, Australia had banned Chinese telecommunications company Huawei Technologies Co. and

ZTE Corp.

of the next generation of 5G mobile networks while also criminalizing foreign interference in domestic policies that many think are aimed at China.

As trade relations deteriorated, China criticized Australia for increasing trade barriers. “Since 2016, the Australian government has launched 25 anti-dumping and anti-subsidized investigations of Chinese products,” said a spokesman for the Chinese Embassy in Australia in December.

Beijing has fulfilled its obligations under the free trade agreement with Australia, the spokesman added.

China imposes tariffs of up to 212% on Australian wine, prompting politicians around the world to criticize what it calls “bullying” Beijing. WSJ visits winemakers who hope global attention will help the industry. Photo: Lisa Maree Williams / Getty Images

How Australia’s barley industry copes with Beijing’s reaction could offer lessons to countries that have angered China and hit punitive tariffs. Farmers like Mr Sattler have been hit hard, but are able to cultivate other buyers for their barley crop before switching to other crops.

“A friend of mine said, if you were sitting on the front porch, you would hear 3,950 augers being transferred from barley to wheat” on the day the rates were announced, Mr said. Sattler, 52, a fourth generation farmer.

The barley fields harvested on Mr. Sattler. Some farmers have turned to crops such as wheat, a trade that China does not dominate.

Mr Sattler will cut the barley program in half this year, although he cites crop rotation as well as weak prices for the change.

South Australian producer Andrew Barr plans to cut the share of barley from the farm he inherited from his father to 20%, from about a third last year. This will be the least amount of space allocated to grain for 20 years on the farm.

Another tactic used by the Australian barley industry is growing the market from the Middle East to Japan and Southeast Asia, and even as far as Mexico, reducing its vulnerability to future trade squabbles even if Chinese tariffs are lifted. Traders project that Saudi Arabia will become Australia’s biggest market this year.

“We are happy to sell it to them, and that got us out of jail this season,” said Barr. “But that’s not what I expect from a long-term solution.”

Mr Barr wants the industry to look for malt makers in Korea, Japan, Vietnam, Thailand and India. These markets pay a premium for higher quality barley and are closer to those of the Middle East, which means lower shipping costs.

There are already signs that other industries are copying the move.

Treasury Vineyards Ltd.

, facing Chinese import tariffs for wine of 169%, plans to ship allocated wines to China to other Asian countries as well as to the US and Europe. The company will also increase marketing in these places.

“We immediately called the barley people to talk to them about their experiences, get their advice on how to deal with it and the approach to take,” Tony Battaglene, chief executive officer of Australian Grape & Wine Inc., an association of grape growers and wine producers, said Chinese fare over Australian wine.

Even industries that have so far avoided Chinese restrictions are responding.

Huon Cultivation Group Ltd.

, an Australian fish farmer, decided early last year to ship salmon to the US that had been allocated to China and said it hopes to cut sales to China more to diversify from that market.

This strategic shift will not be easy or quick as exporters face stiff competition, and not all businesses can adopt the same guidelines. Farmers can switch between crops with relative ease.

Australia began consultations with China on January 28, the first step in the WTO settlement process. Trade Minister Dan Tehan said Canberra was considering next steps, including whether to ask a WTO panel judge.

For Australia, commodities like barley are part of its economy. “This is huge for barley farmers,” said AMP Capital chief economist Shane Oliver about the tariff. “But it’s not a disaster for Australia.”

Mr. Sattler with Copper’s dog. Farmers say he is cutting the barley program in half this year.

So far, the market targeted by China only accounts for about 1% of Australia’s gross domestic product, he said.

For many, a market realignment away from China is long overdue, even if it brings short-term suffering to exporters.


How do you think countries like Australia should deal with economic coercion? Join the conversation below.

John Blaxland, a professor of international security and intelligence studies at the Australian National University, said Australia’s trade relations with China had reached a turning point reminiscent of Britain’s decision in the 1970s to join the European Union. At that time, Australia was forced to divert its trade efforts from Britain.

“We have been leaning towards the biggest prize for the last two decades: China,” said Prof. Blaxland. “In doing so, we have neglected opportunities closer to home.”

Write to Rhiannon Hoyle at [email protected]

Copyright © 2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8


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Rates for Wine, Food from Europe for the Current Stay, said the US | Instant News

WASHINGTON – The Biden government has said it will not end tariffs on European wine, cheese and other food imports any time soon – upsetting industry groups who say the levy is hurting US restaurants and consumers.

The US Trade Representative’s Office said on Friday that there was no need for now to suspend levies, which the Trump administration imposed as part of a long-running dispute with the European Union over subsidies for commercial aircraft.

In a regulatory filing, the USTR said it would “continue to consider the actions taken in the investigation,” referring to a 17-year-old dispute about how the government is subsidizing Boeing Co. and Airbus SE. The Biden administration said it was reviewing tariffs and other major trade policy measures adopted by the previous administration.

Under the Trump administration, the dispute has turned into a tariff fight that has ensnared a food and beverage industry unrelated to aircraft manufacturing. Washington imposed tariffs on $ 7.5 billion worth of European wine and food such as cheese and olives by the end of 2019.

The European Union retaliated with levies on US whiskey, nuts and tobacco worth an estimated $ 4.5 billion. The US increased sanctions on December 31 with additional tariffs, putting nearly all wine imports from France and Germany below 25%.


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China’s Coal War With Australia’s Domestic Fuel Shortage | Instant News

HONG KONG – China Australian coal import ban is intensifying the crisis in the coal market, which is battling price hikes, shortages of supply, conflicting policy objectives, and a cold winter.

Locked in a diplomatic fights on Canberra’s call independent global investigation to the origins of Covid-19Beijing imposed an unofficial ban around September that forced Australian coal ships to languish at sea. China’s central government imposed a formal embargo at a mid-December meeting with China’s main power producers, which are big buyers of thermal coal.

The ban complicates a supply crisis that the meeting had to resolve, according to government reports and state media. China is short on thermal coal and officials are urging companies to import more – from anywhere but Australia, China’s biggest supplier. To meet this, buyers in China have to pay a high premium for imports from distant places, in addition to prices which have increased 84% since mid-year.

“Coal buyers are nervous about the import market,” the China Coal Transport and Distribution Association, which represents importers, said in a statement. “It is difficult to replenish low coal supplies and shortages, while demand continues.”

From Norwegian salmon to Mongolian commodities, Beijing has in recent years increasingly used the weight of Chinese purchases to apply political pressure abroad – but the coal market shows that this strategy could backfire. Even when Chinese buyers comply with Beijing, Australian coal prices strengthen as other buyers from major coal consuming countries, including Japan and India, step in.


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Ship Operators Seeking Calmer US Trading Waters Under Biden | Instant News

The global shipping industry hopes President Biden’s “America back” declaration means the US returns to principles of free trade, and moves away from the Trump administration’s protectionist policies that often drag ships into efforts to enforce sanctions.

A long-running trade dispute with China and sanctions on big oil producers such as Iran and Venezuela have seen shipping companies navigate a complex and fast-changing network of financial and operating restrictions.

This left dozens of fully loaded ships idle for long periods of time and their owners were forced to cancel shipping contracts and pay high legal fees to avoid US punitive action.

“What we hope for in the new government is some form of consistency and logic in policies dealing with China and predictability. It’s gone, “said Hamish Norton, president of Star Bulk Carriers Corp., a company registered in the Marshall Islands, which is registered on the Nasdaq with more than 100 dry bulk carriers.

Ship owners were surprised in Fall 2019, when the White House was blacklisted more than half of the fleet at Cosco Shipping Energy Transportation Co., a tanker unit of state-owned shipping giant China Cosco Group, for allegedly moving Iranian oil in violation of sanctions. The ban sparked a surge in oil transportation costs as crude producers, fearful of US sanctions, immediately stopped using any ships linked to Cosco. China’s tanker business operates 120 vessels.

The ban was lifted in January 2020 but ended in millions of dollars in losses for Cosco in lost business. It also worries dozens of mostly European boat owners who fear U.S. punishment.

“Every country has the right to push for any trade policy it wants, but this is like carpet bombing without warning,” said a senior executive at China’s state airline company. “The Cosco ship is a pawn in the trade war and that’s unacceptable.”

Shipping is a volatile and capital-intensive industry, and its operations are highly sensitive to changing patterns of supply and demand.

Dry bulk carriers, which move iron ore, coal, grain and other large industrial-scale goods around the world, saw overall volume decline last year as a larger share of the trade flows headed to China to help feed the country’s economy. who rose again. The market for the dry bulk sector’s largest vessels “has always been volatile, but in the last two years it has strengthened,” said Peter Sand, chief shipping analyst at Denmark-based trading agency Bimco.

Container lines have run into difficulties in recent years but are now enjoying record high freight rates as US retailers race to restock after the government imposed a lockdown to contain the spread of Covid-19. Tankers fared even worse as pandemic curbs cut global oil demand by 8.9% in 2020 from the previous year, according to the US Energy Information Administration.

Industry executives do not expect a fast resolution of trade differences between the US and China under President Biden. But they hope the government will avoid the harsh rhetoric that has spread across the Pacific and will work quietly to normalize relations.

“No single country has all the natural resources or can produce everything, and tariffs increase costs,” said Angeliki Frangou, chief executive of three companies registered in the US under the name Navios group which operates 200 combined vessels.

The ship’s owners also hope sanctions against Iran, one of the world’s top oil producers, will eventually be lifted if Washington reconnects with Tehran in a bid to halt Iran’s nuclear program.

They believe rapprochement in the US-China trade relationship will be a boon for shipbuilding, and they point to the potential impact on carriers of liquefied natural gas as an example.

China is a major buyer of LNG, and US purchases of oil and natural gas have helped fuel a boom in American energy exports and ship orders.

But according to the EIA, US LNG exports to China fell from 103 million cubic feet in 2017 to 6.8 million cubic feet in 2019, as trans-Pacific trade relations heated up.

“America has become a top LNG exporter and only ships can move it,” said Greek shipping magnate George Prokopiou, who has a fleet of 124 tankers, gas carriers and dry cargo carriers. “Changing the policy of selling to China creates big problems because LNG cannot be stored and evaporates.”

Mr Prokopiou said the trade ban encourages buyers like China to source LNG from other producers.

“Your ship is specially made for moving large American cargoes across the Panama Canal and is chartered by US exporters for the long term,” he said. “But suddenly your contract is canceled in an instant and you have to pay a huge bill. We’ve passed trade embargoes in the past, but not like this. “

Several shipping companies have benefited from the global commodity turmoil. Last year’s plunge in oil prices, the Cosco tanker ban and sanctions on Iranian and Venezuelan oil producers are boon for operators such as Tsakos Energy Navigation Ltd. registered in the US, who watched tanker freight rates skyrocketed..

But Nikolas Tsakos, the company’s founder and chief executive, prefers the high seas with predictable shipping.

“We are truck drivers at sea and the less barriers to trade and protectionism, the better for shipping,” he said. “I like Mr. Biden’s motto that America is back. Greater US engagement with the rest of the world will cut barriers and open up trade. We certainly want to be a part of it. “

Write to Costas Paris at [email protected]

Copyright © 2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8


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US to target more French, German, alcoholic drinks at 25% rate | Instant News

WASHINGTON – The Trump administration has said it will target more French and German wines and spirits at 25% tariffs starting January 12, in the latest escalation in the tit-for-tat tariff battle over a long-running dispute over subsidies for commercial jet airliners.

Among the new levies, the US will for the first time impose a 25% levy on wine from France and Germany in excess of the 14% alcohol it had previously exempted, according to the Office of the US Trade Representative.

The US has seen a spike in these highly alcoholic wines, typically from Spain and France, after wines with 14% alcohol or less were charged last year.

“Especially with what is happening in light of the pandemic, with the closure of restaurants and refineries, this is not the right time to enter an industry that is already facing economic impact,” Christine LoCascio, head of public policy for the US Council’s Distilled Spirits, said Thursday.

Washington imposed a 25% tariff on wines from France, Spain, Germany and the UK in October 2019 in retaliation for subsidies they made to European aircraft maker Airbus SE.
on the grounds that they hurt Boeing Co.

An expanded version of this report appears on WSJ.com.

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