Australia-China trade: Wine export industry in for upheaval as China tariffs bite

The once-lucrative Aussie wine trade to China is in for some serious restructure, in the face of China’s hefty tariffs for the next five years. What are the industry’s next steps?

Wine exports to China have essentially come to a stop after China introduced tariffs of more than 200 per cent on Aussie product.

AUSTRALIA’s wine export industry will be in for a structural change after China locked in crippling tariffs of more than 200 per cent, the sector says.

The anti-dumping duties on bottled still wine of between 116 and 218 per cent will effectively shut down Australia’s $1.2 billion wine export trade to China for the next five years.

Australian Grape and Wine chief executive Tony Battaglene anticipated that would force exporters to completely change their market development approaches away from the industry’s heavy reliance on China.

“Even if the (Chinese) market came back rapidly, I don’t think it would go back the same way, people would be looking at diversifying a lot more,” he said.

“The real growth will be in the South-East Asia markets and the traditional markets, the Koreas, the Taiwans, the Japans – that we’ve probably neglected because of China.”

The sector will make a decision on its next steps after Easter, with World Trade Organisation action likely.

Australia woke to the news on Saturday that China had locked in the tariffs overnight, after launching an anti-dumping investigation in August.

Interim tariffs introduced in November had already brought most Chinese wine exports to a halt, dropping to less than $1 million in January this year.

Mr Battaglene said the duties did not apply to bulk wine or sparkling, ”the question is, will people try to export at all or is the sovereign risk too high for those commodities as well”.

Trade Minister Dan Tehan said accusations of dumping were “completely unjustifiable”.

“Steps taken like this by the Chinese Government are extremely disappointing, and we’ll take all steps we can to try and reverse them,” Mr Tehan said.

Mr Tehan at the weekend also met with representatives from the fodder export industry, which has its own concerns after 25 hay exporters have yet to have their export permits to China renewed after they expired in February.

Chief executive of hay exporter Gilmac, Munro Patchett, said no reason had been given for the delay; however, he noted Chinese officials usually come to inspect the facilities prior to approving permits, which they may have not been able to do due to COVID-19 travel restrictions.

About 30 per cent of Australia’s hay exports go to China.