As tensions between Australia and China continue to surge, Australia said China’s reported ban on its coal ex-
ports was an obvious breach of World Trade Organization (WTO) rules. During mid-December, reports emerged that China was not allowing Australian coal imports while striking deals with Canada, Indonesia and Russia. The state-run Global Times reported that China’s National Development and Reform Commission had granted 10 major power companies approval to import coal without clearance restrictions, except for coal from Australia.

Prime Minister Scott Morrison said the Chinese government hadn’t confirmed media reports that Australia’s multibillion-dollar coal exports are now subject to an informal ban. “If that were the case, then that would obviously be in breach of WTO rules,” Morrison said. “It would be obviously in breach of our own free trade agreement and so we would hope that is certainly not the case.”

Each dispute has been billed as a technical issue, but many in Canberra believe the sanctions are retribution for Australia pushing back against Chinese influence at home and in the Asia-Pacific.

At least 13 Australian sectors have been subjected to tariffs or some form of disruption, including barley, beef, copper, cotton, lobsters, sugar, timber, tourism, universities, wine, wheat and wool.

Many Australia shipments have reportedly already been blocked at Chinese ports.

But even an informal ban would be a dramatic escalation, targeting one of Australia’s most valuable exports — worth up to $3 billion a year — and a sector that Morrison’s conservative government has been keen to champion, despite objections from environmentalists.

Australia has long hinted that it may seek WTO intervention in the disputes, but a resolution could take years, open Australia up to retaliatory claims and worsen relations with Beijing further.

The Chinese thermal market is important to Australia. It represents about one-third of its customer base. Australia exports more than 200 million mt of thermal coal and as of H1 2020 China had imported 32 million mt of thermal coal from Australia.