Australia & China: CBH barley ban to stop potential exports to China free trade zones

China's latest blow to Australia's barley exporters, a suspension of Western Australian grain exporter CBH due to alleged phytosanitary breaches has been dismissed in some corners as mere symbolism due to the hefty tariffs already in place, The Australian Dairyfarmer reported on September 4.

However, CBH chief marketing and trading manager Jason Craig acknowledged it would mean the company would not have the chance to explore options in exporting to China's free trade zones (FTZs).

China has 18 free trade zones spread around the country where goods can be imported without duties.

This means the 80 per cent duty currently excised on imports from Australia is not applicable.

If the goods end up in the rest of the country then the relevant duties must be paid but the product can be processed and then exported without charge.

China is a major exporter of malt and malted barley to its neighbours throughout Asia.

This means Australian barley exporters have been looking at opportunities within the FTZ space.

Estimates of total tonnages that could head to China this way vary but some have totals up to 250,000 tonnes possible.

While this is but a fraction of the 5.9 million tonnes China bought from Australia in 2016-17 it would still be sufficient to mean the Chinese FTZs collectively would be in Australia's top five barley customers.

"There may be opportunities there for others to explore but we will not be able to take part in that due to this ban," Mr Craig said.

Since the Chinese tariff decision was handed down on May Mr Craig said the company had been concentrating on alternative markets such as Thailand, Japan and Saudi Arabia.

"At present values Australian barley is competitive into these markets," Mr Craig said.

In terms of the Chinese ban, which is for the alleged presence of weed seeds such as brome grass and wild oats, Mr Craig said negotiations on phytosanitary issues were conducted government to government but added CBH was confident it had complied with protocols in regards to weed seed numbers.

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