China will lift its punitive tariffs on Australian barley exports from Saturday.

The 80.5 per cent tariffs were imposed on barley imports in May 2020, over what the Chinese government said were concerns over the dumping of cheap grain.

“The Ministry of Commerce ruled that, in view of the changes in the market situation of barley in China, it is no longer necessary to continue to impose anti-dumping duties and countervailing duties on the imported barley originating in Australia,” the Chinese government said on Friday afternoon.

Australia said it would suspend a World Trade Organisation dispute against China in exchange for Beijing agreeing to review its tariffs.

The decision comes before the August 11 deadline for Canberra to reinstate the dispute.

Trade Minister Don Farrell, Foreign Minister Penny Wong and Agriculture Minister Murray Watt said in a joint statement the decision would benefit Australian producers and Chinese consumers.

“It affirms the calm and consistent approach that the Albanese government has taken,” the ministers said.

Senator Wong said the change would not have been possible without working with the ATO.

“We will continue to work consistent with the ATO system … to resolve differences in trade matters,” she said.

Senator Wong also repeated the Albanese government’s line that it would engage with China where it could, and “disagree when we must”.

Since May 2020, China’s duties on Australian barley have effectively blocked $916 million in exports to the world’s biggest beer market.

“The removal of these duties means that Australia will now discontinue legal proceedings at the WTO,” the ministers said.

“This outcome demonstrates the importance of the WTO dispute mechanism in defending the interests of Australia’s world-class producers and farmers.”

The National Farmers Federation welcomed Friday’s announcement, which it said was good news for about 23,000 producers affected by the 2020 crackdown.

:Today’s announcement is a positive outcome and another step in the right direction to resuming full trade with an important market for Australian agriculture,” it said in a statement.

A similar dispute over Australia’s wine exports to China is yet to be resolved.

“We have been clear that we expect a similar process to be followed to remove the duties on Australian wine,” the ministers’ statement said.

“In the meantime, we are continuing to pursue our wine dispute at the WTO and remain confident in a positive outcome.”

-with AAP