China launches anti-subsidy case against Australian wine

Just a fortnight after announcing it would open an anti-dumping investigation into imported Australian wine, China has launched an anti-subsidy case into the sector. Vote now to tell us if that’s unfair.

Australian-made wine on display at a store in Beijing. Picture: Noel Celis / AFP

CHINA’S Ministry of Commerce has launched an anti-subsidy investigation into Australian wine exports.

The nation’s $1 billion export industry was bracing itself for the second attack in a fortnight after China announced it would open an anti-dumping case into Australian wine exports on August 18, and flagged a countervailing duties investigation would follow.

China’s anti-subsidy investigation will determine whether the Australian Government has unfairly subsidised domestic wine producers, in addition to investigating whether Australian wine exporters have engaged in “dumping”, or selling wine below its normal value and therefore putting Chinese wine producers at a disadvantage.

Australia’s peak body representing winemakers and grape growers, Australian Grape and Wine, said it was well-placed to respond to the investigation and would collaborate with wine businesses and the Federal Government “to ensure we co-operate fully throughout the investigation process”.

At lot is at stake for Australia’s $6 billion wine industry, which is the most popular exported wine in China with almost 40 per cent of $2.9 billion in Australian wine exports sold there in 2019-20, according to IBIS World.

The Chinese have developed a taste for Australian wine and increasingly, the more expensive labels such as Treasury Wine Estate’s Penfolds Grange, sales of which have been hit hard by China’s national lockdowns and the closure of the retail industry.

Australian Grape and Wine chief executive Tony Battaglene said the industry was well aware of what happened following China’s anti-dumping and anti-subsidy investigations into Australian barley, which saw China slap an 80 per cent tax on all barley grain imported from Australia in May.

“We’re nervous. We can’t predetermine an outcome but we’re making sure we have the best possible case,” he said.

The anti-subsidy case stems from an application from the China Alcoholic Drinks Association which requested its government assess subsidies the Australian Government offered its wine industry. They argued a 290 per cent tariff would be needed to compensate for the level of government assistance Australian producers received.

Mr Battaglene said there were unlikely to be any immediate implications for Australian wine exports bound for China. While China could implement an interim tariff in 60 days, it would need to make an assessment beforehand and did not take this path with barley.

And given Australian wine was the second most-expensive exported wine sold in China — after only to New Zealand — he said their case would be a difficult one to make.

“It is very difficult to see how we could have dumped there. But we do know the Chinese industry has been struggling and losing market share to imported product over the past three years. Their industry is in pain and they’re looking to see how they can support it,” Mr Battaglene said.

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