Australian wine exports face China tariffs of more than 200% over ‘dumping’ claims

Simon Birmingham said levies over 200% would cripple business, as the nation’s top winemaker went into a trading halt | The punishment list

Australia’s win exporters face hefty tariffs in China.

Beijing will hit Australia’s $45 billion wine industry with an effective tariff of more than 200 per cent from midnight that will cripple exports to its biggest overseas market.

China’s Ministry of Commerce said in a statement on Friday that it had found a “causal relationship” between the dumping of Australian wine and damage to China’s domestic wine industry.

The Ministry of Commerce said that an import duty deposit scheme ranging from 107.1 per cent to 212.1 per cent would be imposed on Australian wine from Saturday.

Trade Minister Simon Birmingham said the Australian government completely rejected the Ministry’s preliminary investigation.

He said the move would render affected Australian businesses unviable.

“The idea that Australia somehow subsidises our wine industry for it to be able to dump or sell product below cost on international markets is a falsehood. It is wrong,” Senator Birmingham said.

“Australia will stand by our wine industry in defending their integrity and in responding and appealing at every appropriate juncture to these findings.”

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The South Australian senator confirmed the government had learned about the “devastating blow” to the wine industry this morning through the Beijing-based ministry’s website.

“The cumulative impact of China’s trade sanctions against a number of Australian industries during the course of this year does give rise to the perception these actions are being undertaken as a result or in response to some other factors,” he said.

“Doing so is completely incompatible with the commitments that China has given through the China-Australia Free Trade Agreement and through the World Trade Organisation. It’s incompatible with a rules-based trading system.”

Trade Minister Simon Birmingham. Picture: Getty Images

Shares in Australia’s biggest winemaker, Treasury Wine Estates which owns iconic brands such as Penfolds and Wolf Blass, fell more than 11 per cent in Friday trade and are currently in a trading halt as the company seeks clarification.

Australian winemakers are desperately seeking more information on the new trade measures

They put at risk $1.3 billion a year in exports of Australian wine to China and come as Australia faces a number of damaging trade disputes with the country that has seen 80 coal ships stuck offshore as customs at Chinese ports declines to process them as well as recent examples of Australian seafood, namely rock lobster, refused port entry and other commodities such as timber and cotton also blocked.

The Ministry of Commerce said the effective tariff followed its preliminary “anti-dumping investigation of wine originating from Australia”.

The Ministry said China’s domestic wine industry had suffered “material damage” because of “dumping” of low priced wine by Australian producers.

Australia’s wine industry has been rattled by the announcement of ‘penalties’ on exports to China. Picture: AFP

Shortly after 1pm Treasury Wine Estates released a statement to the ASX confirming it requested a trading halt pending its response to the Chinese Ministry of Commerce decision to apply provision anti-dumping measures to Australian wine imports.

“TWE is reviewing the details of the provisional measures as a matter of urgency in order to update the market,” the statement read.

Industry reaction

Wine industry insiders told The Australian the Chinese Ministry of Commerce would be implementing an import duty deposit scheme where Australian winemakers would pay a deposit for each shipment of wine and that deposit later refunded if the industry is cleared of anti-dumping at the end of the investigation next year.

The deposits will be charged on a sliding scale from 169 per cent to 200 per cent, according to wine industry sources.

Australian Grape and Wine chief executive Tony Battaglene told The Australian on Friday he was very disappointed with the preliminary finding by the Chinese government that Australian winemakers had engaged in dumping of cheap wine into China.

This was particularly the case as only recently Australian winemakers had submitted lengthy 80 page questionnaires to the Chinese Ministry of Commerce answering the anti-dumping allegations and providing evidence that there had been no dumping of Australian wine.

“Pretty obviously we are disappointed and we also didn’t believe we would get a provisional tariff put on us because we have submitted all the questionnaires on time, only a couple of weeks ago, and I wouldn't have thought there was enough time to have made an assessment based on those,” Mr Battaglene told The Australian.

“We are surprised about the timing and absolutely surprised about the fact there is any tariff let alone the magnitude of it because we just don't accept the fact that we have ever been dumping product in the Chinese market or that there has been damage to the Chinese (wine) industry.”