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Australian Lobster Producers Find Unofficial Routes into Restricted Chinese Market

A lobster is seen at a fish market in Sydney, Australia in this still image taken from video on January 21, 2021.

Industry statistics appear to show that lobster producers in Australia are selling millions of dollars’ worth of the crustaceans to China despite Beijing’s unofficial trade restrictions. Experts say fishing companies are taking advantage of so-called “gray channels.”

In November, China imposed what experts said was an unofficial ban on Australian lobster imports. The trade was worth hundreds of millions of dollars.

China had been buying more than 90% of lobsters exported from Australia.

However, figures released by the organization representing a major Australian lobster producer have shown a sharp rise in exports due to what is known as “gray trade.” The term refers to the selling of goods through indirect and unofficial channels.

The Western Rock Lobster Council, an organization that represents the lobster industry in Western Australia, has reported that exports from Western Australia to Hong Kong rose from very low levels in October 2020 to more than 300 metric tons in March 2021. Experts believe the consignments were almost certainly shipped to and sold in mainland China.

Restrictions on Australian lobster exports to China are part of the simmering trade dispute between the two countries, which has also affected shipments of Australian coal, wine, barley and other commodities. China has imposed restrictions and tariffs on these goods.

Jeffrey Wilson is an international commerce expert at the Perth USAsia Centre, a research think-tank. He says the “gray trade” in lobsters would be mainly controlled by importers in China, who are keen on circumventing Chinese government restrictions.

“The reason that you are getting a gray trade happening in lobsters and not in coal and not in barley is it reflects it is one area where there was almost complete mutual interdependence. Australia completely relied on China for the market for lobsters, and China completely relied on Australia for the supply of them,” Wilson said.

Wilson says unlike goods traded in the so-called black market operating in the shadows which might have some aspect of illegality, gray market sales may operate outside official channels but don’t break the law.

“This is not illegal is the first thing to say. So, that is probably the reason it is not a black market, because there is nothing illegal about sending lobsters to Hong Kong,” Wilson said.

There has been no official comment from the Australian government or the Western Rock Lobster Council.

China is Australia’s biggest trading partner. The important commercial relationship has been destabilized in recent years due to various geopolitical disputes. Australia’s call last year for an independent investigation into the origins of COVID-19, which was first detected in China, infuriated Beijing. Also, Canberra’s increasingly close military ties with the United States have angered Chinese authorities.