Two Australian cotton industry groups said China has begun preventing its spinning mills from using cotton imported from Down Under.
“Our industries have realized that the National Development Reform Commission in China recently stopped their country’s spinning mills from using Australian cotton,” said Adam Kay, CEO of Cotton Australia and Michael O’Rielley, Chairman of the Australian Cotton Shippers Association. said in a statement.
China’s Ministry of Commerce has yet to respond officially.
Australia’s Minister of Agriculture
“I think it’s important that we get clarification before we pick up the gun. So we’re working with industry and Beijing to make sure we get some answers, ”he said.
Two years ago, according to a report by the US Department of Agriculture, China added about 800,000 tons of additional cotton import quotas, which are subject to a scaling requirement, in order to meet the demands of its textile industry.
Under Beijing’s obligations to the World Trade Organization, this means that China is obliged to allocate 894,000 tons of cotton imports annually, which are subject to an import tariff of 1%, according to the 2018 US report. Imports above this quota would be subject to a tariff of 40% charged, which is not economically viable for exporters given market prices.
“We are concerned that there are reports of Chinese officials telling millers not to allow Australian cotton to participate in this initial quota,” Littleproud told CNBC, adding that the industry is working to ensure that alternative markets are available.
“So Indonesia, Vietnam and India all take up significant parts of our cotton harvest,” he said, referring to a free trade agreement with Indonesia that had been ratified months earlier.
Acid trade relations
Brendon Thorne | Bloomberg | Getty Images
Littleproud ruled out short-term subsidies to farmers, but said the Australian government was working to give them the opportunity to spread their risk.
“We told our exporters whether they should be caught in wine or barley. We have concluded up to 14 free trade agreements around the world and given you the opportunity to spread this risk. This is a commercial choice for our exporters in any industry. “To make that choice,” he said.
“Obviously, they will be making assessments of the risks of trade with China, as this is obviously another simple business principle. The greater the risk, the more rewards you seek, ”added Littleproud.
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