Beijing ‘wine war’ headed to WTO

The Morrison government could bring a fresh World Trade Organisation action against China over punishing wine tariffs in a matter of ‘weeks’.

The Morrison government could bring a fresh World Trade Organisation action against China over punishing wine tariffs in a matter of “weeks”, opening a new source of trade tension with the Asian superpower.

Any move would come on the heels of recent WTO action by the federal government challenging China’s steep tariffs that were slapped on Australian barley exports, Trade Minister Dan Tehan said.

Speaking at The Australian’s Global Food Forum in Sydney on Tuesday, Mr Tehan welcomed New Zealand’s decision this week to stand by Australia as it prepared to take on its biggest trading partner on the global stage, saying the move helped back a rules-based trade system.

“The important thing is that the New Zealand Trade Minister has come out and said that he wants to take this action because he wants to back the WTO and the rules-based system,” he told the forum, which was presented in partnership with Visy.

“And that’s incredibly important for a nation like Australia. If the rules are governed by economic heavyweights, we get caught in the way, and we suffer damage. What we need is an independent body that sets the rules ... but also that is independent.”

The federal government announced plans to challenge China’s tariffs on barley in the WTO last year.

China followed up last Nov­ember by announcing tariffs on Australian wine exports of up to 200 per cent, effectively killing the largest export market for Australian wine, worth more than $1 billion.

The Global Food Forum heard from a string of Australian companies, including Andrew Forrest’s Tattarang, Maggie Beer, ASX-listed Bubs Australia and Top Shelf International, that were still planning to sell food products into the China market, despite the trade and political tensions.

Companies such as Barossa Valley winemaker Chateau Tan­unda told how they were stepping up efforts in selling into the Australian domestic market as well as other markets in Asia, the US and the UK, to diversify from their former reliance on the China market.

Mr Tehan said the government was working hard in negotiations for a potential free-trade agreement with Britain that could be signed when Scott Morrison visited the UK for the G7 meeting in Cornwall next week.

He said the government would make a decision on whether it would take China to the WTO over Australian wine in coming weeks. “We think it is a strong case but we want to make sure we’ve dotted every ‘i’ and crossed every ‘t’ before we make a final decision,” he said.

Mr Tehan downplayed concerns the US was rushing to fill gaps in the global market left by Chinese-Australian trade tensions, saying he had been in frequent contact with his American counterpart, Katherine Tai.

“Countries are meeting demand but what you’ve got to understand is where they’re meeting demand for China, that gives us opportunities elsewhere for our commodities,” he said. “We’re seeing a shift in where our commodities are going, and that’s a good thing. You look at our coal exports, they’re going to India, to Indonesia, to other countries.”

Mr Tehan also confirmed that he would be seeking full trade liberalisation in a new deal with the UK. “Not only can we do this agreement between the UK and Australia, but it will open up opportunities for (the Comprehensive and Progressive Agreement for Trans-Pacific Partnership) CPTPP for the UK as well, if they can strike a very good deal with Australia,” he said. “That means they can seek to pursue new markets, make sure they’re competitive. I see this as a real ‘win-win’.”

Mr Tehan said he was working with his British counterpart, Liz Truss, to negotiate down a proposed 15-year transition period and to address concerns around emission reductions. “I’m very keen to make sure we end up with full liberalisation for agricultural products for Australia,” he said.

“She obviously has to deal with the sensitivities of her own agricultural sector. But my aim is to get an outcome which ultimately will take us back to where we were 50 years ago when the UK turned to the EU.”