Australia says coal import ban by China would breach WTO rules

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Prime Minister Scott Morrison said Tuesday that a Chinese ban on Australian coal imports would breach World Trade Organization rules, as his government urged Beijing to resume dialog to ease the worsening diplomatic dispute.

More than 50 vessels carrying Australian coal have been stranded off China after ports were verbally told in October not to offload such shipments. China’s National Development and Reform Commission on Saturday appeared to formalize those curbs after giving power plants approval to import coal without restrictions, except from Australia, under efforts to tame price gains, the Global Times reported.

If that proved to be correct, such a ban would also breach the free-trade agreement that China and Australia signed in 2015, Morrison told reporters. “It would be a bad outcome for the trading relationship,” he said, adding the conflation of political and trade issues could “create a lot of uncertainty for many other trading partners.”

China’s Foreign Ministry spokesman Wang Wenbin told a regular news briefing Tuesday in Beijing the government was unaware of the situation when asked about the state media report of a formal ban. He said China had been acting “in accordance with the law and international practices.”

Australian coal producers tumbled on Tuesday. Whitehaven Coal Ltd. closed 5.9% lower in Sydney trading and Yancoal Australia Ltd. fell 8.4%.

Ties between China and Australia have been fraught since 2018 when Canberra barred Huawei Technologies Co. from building its 5G network on national security grounds, and worsened this year after Morrison’s government called for an international inquiry into the origins of the coronavirus. Beijing accuses Canberra of being a puppet of the U.S. and of meddling in its internal affairs.

China has hit Australian barley and wine with crippling tariffs and told traders to stop buying commodities including copper, sugar, timber and lobster.

It’s a marked reversal in the once cordial relationship that saw Australia host a state visit by President Xi Jinping in 2014 and sign a comprehensive free-trade agreement a year later.

Trade Minister Simon Birmingham said a formal coal ban would “indicate discriminatory trade practices” and he implored Beijing to open up lines of communication to resolve the dispute.

The government is concerned that China’s actions don’t appear to be consistent with “the letter or the spirit” of that trade agreement, Birmingham said. Australia is very close to mounting a case against the barley tariffs at the WTO and is considering the avenues open to it for coal, he said.

“The risk profile of trading with China has grown significantly during the course of this year,” Birmingham said.