Birmingham says Australia will hold firm despite China wine hit
Winemakers have held crisis talks on China’s threat to Australia’s $1.1bn exports, as the PM vows Beijing’s anti-dumping probe won’t change the nation’s positions on the world stage.
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Winemakers have held crisis talks on China’s threat to Australia’s $1.1bn wine exports, as Beijing denied its anti-dumping probe was politically motivated.
Federal Trade Minister Simon Birmingham held talks with several winemakers on Wednesday, including Treasury Wine Estates, the owner of Penfolds, whose shares dropped on Tuesday after China’s shock announcement.
Pernod Ricard, Yalumba and Accolade were also at the talks with the wine industry’s peak body, Australian Grape and Wine.
While the 12-month inquiry will not impact the sector while it is underway, the industry fears Beijing could use the probe to slap import taxes on Australian wine once it concludes – as it did for barley.
Despite souring relations between the two countries, China’s Foreign Ministry spokesman Zhao Lijian denied the anti-dumping probe was politically motivated.
“There’s no need to read too much into it,” he said.
Prime Minister Scott Morrison said Australia would stand firm on its positions on foreign affairs, national security and infrastructure, regardless of China’s actions, but stopped short of calling them economic coercion.
“We’ll deal with the challenges as they present … whether that’s on barley or whether that’s on meat or whether it’s on wine,” he said.
China targets Aussie wine
By Claire Bickers, Cameron England
TUESDAY: China has launched its biggest threat to Australian trade yet, this time targeting Australia’s $2.9 billion wine industry.
China’s Ministry of Commerce on Tuesday launched an anti-dumping probe into Australian wine imports, which comes just months after Beijing slapped higher import taxes on Australian barley following a previous anti-dumping inquiry.
It’s prompted concerns for South Australia’s multibillion-dollar wine industry, which would be heavily impacted as the biggest wine export state in Australia.
China is SA’s biggest wine export market, with the state sending $813.9 million worth of wine or 43.4 per cent of its total wine exports to the country in 2019-20.
Meanwhile, the shares of Treasury Wine Estates, the maker of Penfolds, plunged 14 per cent on Tuesday, and trading was brought to a halt.
Treasury chief executive Tim Ford said the company would be watching developments closely.
“This decision matters deeply to our business and the entire wine industry, both in Australia and China,’’ he said in a statement.
“We have played a long-term positive role in growing the wine category in China, and we will continue to take a leadership role as this issue plays out. We now roll up our sleeves and work with governments at all levels to resolve the situation.”
Beijing’s new 12-month inquiry announced on Tuesday will look at Australian wine imports in 2019 in containers holding two litres or less.
It will also look at any damage done to the Chinese wine industry from 2015 to 2019.
Beijing has also informed advised Australia that they are considering a launching a countervailing duties investigation, which would examine whether Australian wine exports are receiving and benefiting from government subsidies.
Federal Trade Minister Simon Birmingham criticised China’s announcement as a “very disappointing and perplexing development”.
“Our wine industry has worked incredibly hard to establish itself as a world-leading producer and export powerhouse,” he said.
“Australian wine is highly sought after in China because of its quality.
“Australian wine is not sold at below-market prices and exports are not subsidised.”
Mr Birmingham said Australia would “engage fully” with the Chinese processes and would “strongly argue the case that there are no grounds to uphold the claims being made”.
“Our government will stand with the Australian wine industry to uphold their integrity and hard earned reputation for producing wines in high demand throughout the world,” he said.
Agriculture Minister David Littleproud said: “Our farmers are amongst the most efficient and least subsidised producers in the world, recognised as second only to New Zealand in our levels of support.”
“While we respect the right of any nation to defend their domestic producers from unfair and uncompetitive trade practices, we reject any claim that Australian wine product has been ‘dumped’ into China.”
China’s Ministry of Commerce launched the inquiry after a request from the Wine Industry Association of China.
Australian Grape and Wine chief executive Tony Battaglene said it was understood complaints were made by the Chinese wine sector, prompting the action by their government.
Mr Battaglene said it was unlikely dumping – the sale of goods at a price lower than in the exporter’s domestic market – was happening, as China was a high-value destination for Australian wines.
“All we know is that the Chinese industry has requested the industry of commerce to undertake an anti-dumping investigation.
“We are now waiting to see what the next steps are.
“China’s our highest pricepoint market so I’d be very surprised if there are any issues around dumping into China, very surprised indeed.’’
Mr Battaglene said with the investigation scheduled to take 12 months, there were no immediate implications for wine producers, however naturally there were concerns within the industry.
“The investigation is meant to go until August 2021. The process is they’ll send detailed questionnaires to our companies and perhaps ourselves and we’ll fill that in, then they’ll go back and make an assessment on, one – whether there is any dumping occurring, and, two – whether there is any damage to their industry.
“It is not likely that there will be any immediate impact except for a lot of work for our exporters and producers.
“People are definitely concerned. We believe that we have a pretty good relationship with Chinese consumers. We’re hoping that this investigation will show what we believe is the truth – that there is no dumping occurring, and exports continue as they are.’’
If China does determine that dumping has taken place, it might move to impose tariffs or other import restrictions on Australian wine, Mr Battaglene said.
Australian Strategic Policy Institute executive director Peter Jennings said the inquiry was a political tactic by Beijing to get Australian businesses to “turn on” and criticise the Australian government over its relations with China.
It was part of a pattern of threats to Australian exports including on barley and beef, Mr Jennings said.
“The political rhetoric is always stronger than what is done,” he said, adding the Chinese Communist Party had to be careful not to annoy too many Chinese consumers by hitting products they liked.
He did not expect Prime Minister Scott Morrison to be swayed on the new threat to Australia’s wine sector.