Fears of Australia’s $1 billion wine industry tumbling into a damaging long-term trade dispute with China have come to pass, with China confirming it will lock in huge tariffs on producers for five years.
- China imposed interim tariffs on Australian wine last year
- The tariffs are likely to be up to almost 220 per cent for the next five years
- The Australian wine industry says while it’s disappointed, it is not surprised
An increase and extension to tariffs on some Australian wine producers paves the way for a World Trade Organisation dispute.
Reuters on Friday reported China’s Ministry of Commerce had confirmed it would impose “anti-dumping measures on some Australian wine imports from March 28 for five years”.
The ministry said importers bringing in wines related to anti-dumping activities, as set out by China, would pay tax to the customs authority, Reuters reported.
China last year introduced interim tariffs of up to 200 per cent, claiming Australian winemakers sold wine below the cost of production and had been subsidised.
Australian Grape and Wine chief executive Tony Battaglene earlier said he expected Beijing to lock in tariffs of almost 220 per cent for the next five years.
Mr Battaglene said an extension of the interim tariffs would confirm the industry’s most valuable market was off limits.
“We’re probably up to the 215 to 218 per cent mark,” Mr Battaglene told the ABC.
“Honestly, it doesn’t matter. When you’re at 200 per cent you’re not viable and when you’re at 215 per cent, you’re even less viable so the market remains closed to Australian wine.”
Once the tariffs are confirmed, it would allow for Australia to refer the dispute to the independent umpire, the World Trade Organiation (WTO).
“We continue to reject the allegations,” Mr Battaglene said.
“For us, China is someone who continually promotes the importance of the World Trade Organisation, so we’ll certainly evaluate very carefully the possibility of challenge through that.
The industry is expected to make a recommendation to the Australian government over pursuing WTO action in the coming weeks.
“My view is we will probably go through the proper channels because we reject the allegations,” he said.
It follows a decision by former trade minister Simon Birmingham late last year to refer China to the WTO over its application of hefty tariffs on Australian barley for similar allegations of anti-competitive behaviour.
Mr Battaglene said, while disappointing, he believed winemakers would appreciate certainty about the trade, worth more than $1 billion last year.
“At least now we know what is happening, at least the industry can get on with the job,” Mr Battaglene said.
“We’re immediately seeing some impact on price for grapes, we’re in the middle of vintage, and we’re seeing a 10 to 15 per cent reduction on red wine prices across the board, in some cases a bit more.”
Department of Foreign Affairs and Trade officials told Senate Estimates the value of Australian trade with China for almost all industries has plummeted by 40 per cent since a trade dispute ramped up between the two countries.
And that wine exports had fallen to less than $1 million in January, from a high of $164 million last October.
“We’re all about looking forward,” Mr Battaglene said.
“We know we’re going to have a tough couple of years. The real pressure has come on those people who solely export into China and we have 1,000 businesses set up to do that.
“A lot of established businesses will have a hit, yes. It will be tough, but we’ve seen good support from the Australian people and we hope that continues.”
Federal Trade Minister Dan Tehan said the government rejected any suggestion Australia’s wine industry was subsidised.
“The government will be extremely disappointed if China makes a final determination to impose duties – we are not aware of any evidence that Australian wine has been dumped or injuriously subsidised in the Chinese market.
“The government will continue to work closely with the Australian wine industry, including on possible next steps in the event that final duties are imposed.”