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Sour grapes: China's 200 per cent tariff blow to Australian wine industry

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The Chinese Government has announced it will place tariffs on all Australian wine imports from tomorrow, striking a blow to the $12 billon a year industry.

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It follows the preliminary findings of a Chinese anti-dumping investigation into Australia’s wine exports that found that dumping exists and causes Chinese winemakers “substantial harm”.

China has accused Australian producers of selling wine for below the cost of production.

The investigation is not due to finish until next year, but China’s Commerce Ministry announced that from November 28, importers of Australian wine entering China will need to pay temporary “anti-dumping security deposits”.

The deposits, which effectively work like tariffs, will range from between 107 per cent to more than 200 per cent.

The move comes after China’s Commerce Ministry gave informal instructions to importers to suspend orders of wine and six other types of Australian exports earlier this month.

Shares in Treasury Wine Estates, one of Australia’s largest exporters, plunged 11 per cent this morning as the news was being confirmed.

The company initially paused trading and then confirmed it will be in a halt until Tuesday.

Tony Battaglene from Australian Grape and Wine said the tariffs would make it incredibly difficult for Australian wine exporters.

“The China market is a big market for us, but also some of our major competitors, particularly from Europe, are [now] given a tariff advantage of 100-200 per cent [which] is going to make it very difficult to compete … it won’t be good,” he said.

Trade Minister Simon Birmingham said the tariffs delivered a “devastating blow” to the wine industry.

“It will render unviable for many businesses their wine trade with China and clearly we think it’s unjustified, without evidence to back it up,” he said.

“It’s a tax on Chinese consumers, essentially, but by taxing the product at such enormous, impactful levels, it will likely see consumers turn away from that, and that is what has the devastating impact on Australian producers.

“That’s why we think it is grossly, grossly unfair, unwarranted, unjustified.”

Battaglene said there were hundreds of shipping containers of Australian wine building up at ports across China since an unofficial ban on imports came into effect earlier this month.

It is understood the wine delayed at customs will now be subject to the tariffs.

“Very little product is going in,” he said.

“We had a reduction in export approvals of 80 to 90 per cent.

“What has gone in is sitting basically in customs, trying to go through increased testing and compliance procedures.”

He said the industry was unaware of any wine that had cleared China’s customs since the ban, and subsequently large numbers of wine exporters had withheld from shipping wine from Australia.

“I can’t remember a year like this. This is the biggest single challenge we have ever faced in such an important market for us,” Battaglene said.

“We need to be able get through this and work with both the Australian and Chinese Government to resolve this.”

Agriculture Minister David Littleproud said the Australian Government was in contact with Chinese authorities.

“We’re trying to get an appreciation of the reasoning behind the determination in introducing these tariffs,” he said.

“That’s why we’re moving quickly to work with the industry and my officials and DFAT officials in Beijing to get an understanding so we can put our case around this decision … that we feel is quite outrageous and, to be honest, disproportionate to any reason that anyone has put to us subsequently.”

The announcement of a wine tariff comes amid souring trading relations that have seen China impose import tariffs on Australian barley.

Premier Annastacia Palaszczuk also weighed into debate on trade relations with China, called on the Federal Government to resolve the trade issues with China “as quickly as possible”.

“Queensland’s trade relationship with China is long and enduring,” Palaszczuk told a Queensland Resources Council function.

“Chinese customers want to buy what we produce.”

While Palaszczuk insisted the trade relationship was “based on mutual respect,” but China’s actions will have an impact on the Queensland economy by undermining various exports.

Treasury will attempt to quantify the impact in next week’s State Budget.

 

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