Beijing may be running afoul of World Trade Organization rules and of its free trade agreement with Canberra if it excludes Australia from a list of countries where Chinese firms are allowed to buy coal without restrictions, Australian Prime Minister Scott Morrison has said.

Morrison was responding to a report in Chinese state-run media Global Times on Sunday, which said that China’s National Development and Reform Commission had given approval for 10 power companies to import coal from countries including Mongolia, Indonesia and Russia without restriction, but with the exception of Australia.

The Beijing government had yet confirmed the news report, but Morrison said on Wednesday that if it was the case, the move would lead to a lose-lose situation for both countries and for the environment. He referred to the negative environmental impacts that would come about by China’s importing of coal of lower quality, which would produce carbon emissions 50% higher than Australian coal.

The bilateral relationship between Beijing and Canberra had been deteriorating for months, with Australia gradually losing its share of the Chinese market, Global Times quoted a Chinese academic as saying.

China was sourcing coal from neighboring Mongolia as the transport costs would be lower, said Wang Yongzhong, director of Institute of Energy and Economy at the Chinese Academy of Social Sciences. In time to come, China would cut back on its greenhouse gas emissions and its demand for coal, which would in turn be beneficial to other coal suppliers, Wang added.

The Ministry of Foreign Affairs in Beijing on Tuesday did not give any confirmation or denial of the coal ban, but spokesperson Wang Wenbin criticised Australian politicians for politicizing the agenda on trade, investment and technology between the two countries.

China has reportedly banned Australian coal imports since October, leaving dozens of bulk carriers stranded offshore.

Australian Trade Minister Simon Birmingham said that if the news story was accurate, Beijing was using discriminatory practices against Australian coal and violating its promises. He called on the Chinese authorities to respect the free trade agreement signed between the two countries.

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