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China says it will drop its tariffs on Australian barley imports that had been in place for three years and affected billions of dollars of trade.
Australia’s Prime Minister Anthony Albanese welcomed the move.
Canberra also said it will suspend its case at the World Trade Organization (WTO) over Beijing’s duties on barley.
In another sign of the thawing relationship between the two nations, Australia this week invited China’s new foreign minister to visit the country.
China’s Ministry of Commerce said the tariffs will be dropped starting on Saturday.
“In view of the changes in China’s barley market, it is no longer necessary to continue to impose anti-dumping duties and countervailing duties on imported barley from Australia,” China’s commerce ministry said.
Before the tariffs were imposed the Australian government had estimated that barley exports to China averaged around A$1.2 billion ($790m; £620m) a year.
In 2020, Beijing imposed tariffs on key Australian exports such as barley, beef and wine, as well as unofficial restrictions on lobster and meat exports from certain abattoirs.
Canberra is now urging Beijing to drop tariffs on Australian wine, which is the subject of a separate WTO complaint.
Australia’s wine industry was hit hard when China imposed heavy tariffs on its exports in 2020, effectively cutting off what was once its most lucrative market.
The relationship between Australia and China deteriorated markedly in 2020 when then-Prime Minister Scott Morrison called for an international investigation into the origins of Covid-19.
Since the election of the centre-left Labor government in May 2022, communications between the two countries have resumed and their relationship has improved.