China tariff a threat to 6000 wine jobs

Winemakers warn up to 6000 jobs are at risk from new tariffs imposed by Beijing.

Trade Minister Simon Birmingham. Picture: Gary Ramage

Australia’s threat to launch action against China through the World Trade Organisation over its strategic assault on key export industries could occur within months, as winemakers warn up to 6000 jobs are at risk from new tariffs imposed by Beijing.

The Australian understands if the federal government proceeds with WTO action, it would be used as a test case over Beijing’s spurious complaints over the dumping of wine, barley and other exports.

The WTO is typically used to force countries into mediating direct outcomes, with the federal government recently dropping action against Canada after a deal was struck to lift restrictions on Australian wine exports.

There are currently no official WTO disputes lodged by Canberra and Beijing against each other despite China’s threats targeting Australian products, including wine, barley, beef, timber and coal.

Under best case scenarios, WTO dispute settlement matters can take up to 18 months to be resolved. The wine dispute with Canada took 2½ years to resolve.

Trade Minister Simon Birmingham on Monday said they would use “all avenues available to defend the integrity of Australian producers”, arguing the government would like to resolve the trade dispute faster than WTO processes normally allow.

Senator Birmingham, who last spoke with his counterpart one year ago, said the government “wants to see China succeed and wants to engage with China” but says Chinese ministers were not returning phone calls.

“China is a country now that we see on the world stage taking a tone and a stance that is more challenging, not just with Australia, but it’s engagement with others,” Senator Birmingham said.

GrainGrowers chief executive David McKeon told The Australian the impact of China’s tariffs on barley exports this year would be at least $500m and “accumulate over five years”.

“At a farm gate level, barley prices are around $40-$50/t below where they would otherwise be this year,” Mr McKeon said.

Australian Grape and Wine chief executive Tony Battaglene said the negotiated outcome with Canada, sparked by WTO action, proved the trade body “does work”.

Mr Battaglene said any action Australia took in relation to tariffs imposed on barley exporters would test arguments put forward by China’s Commerce Ministry.

“For us, this is an interim tariff in place for four months. We don’t believe there is a case there and we will be putting in our submission this week,” Mr Battaglene said.

Major wine exporters, including Treasury Wine Estates and Casella Wines, are expected to be able to minimise exposure with greater access to markets outside China. There are 800 exporters who rely almost entirely on the Chinese market.

Mr Battaglene warned between 5000 and 6000 jobs, mainly in South Australia and Victoria where exposure to the Chinese market was greatest, were at risk.

The new tariffs, which came into effect on Saturday, followed a lift in wine exports over the three months to September, to $860m from $715m in the previous quarter. Wine export values over the year to September climbed by 4 per cent against the same period a year before to just shy of $3bn, Wine Australia figures show. Sales to mainland China went up by 4 per cent to $1.2bn over the 12 months, or 40 per cent of total wine exports by value.

Agriculture Minister David Littleproud said there was “mounting evidence” to suggest China’s actions were linked to “sovereign decisions we have made”.

Additional reporting: Patrick Commins