Chinese move on cotton market

AUSTRALIAN cotton producers are reporting that Chinese authorities have been discouraging their mills from using Australian cotton as the trade dispute escalates.

It is the second industry this week to raise an alarm about the strained relationship, after customs authorities reportedly told companies to stop importing Australian coal.

Trade Minister Simon Birmingham is demanding Beijing rule out any “discriminatory actions” against cotton producers.

“Impeding the ability of producers to compete on a level playing field could constitute a potential breach of China’s international undertakings, which would be taken very seriously by Australia,” Senator Birmingham said.

“We are aware of concerns about possible changes in export conditions for our cotton exporters and, in consultation with the cotton industry, are seeking to clarify the situation.”

Senator Birmingham said Australian cotton exporters had worked hard to win contracts and establish themselves as reliable suppliers of cotton in the Chinese market.

Chinese millers have quotas for Australian cotton imports but have been warned they might not get their quota next year if they continue to buy.

Cotton Australia and Australian Cotton Shippers Association confirmed in a joint statement on Friday that the National Development Reform Commission in China had been discouraging the use of Australian cotton

“Our industry’s relationship with China is of importance to us and is a relationship we have long valued and respected,” it stated.

“To now learn of these changes for Australian cotton exports to China is disappointing, particularly after we have enjoyed such a mutually beneficial relationship with the country over many years.

“Despite these changes to our industry’s export conditions, we know Australian cotton will find a home in the international market.”

Cotton Australia chief executive Adam Kay told ABC that most of the Chinese mills it had spoken to had been affected.

“It is concerning for us because something like 65 per cent of our Australian crop does go to China at the moment,” he said.

“This afternoon I will be meeting with our embassy in China, some of the trade officials there, and try and get to the bottom of it.”

Treasurer Josh Frydenberg said the issues with China and the trade relationship were “challenging”.

“When it comes to our twoway trade worth more than $200bn a year with China, it’s important to remember that it is mutually beneficial,” he said.