Wine industry braces for China’s anti-subsidy case

A looming anti-subsidy case has Australia’s wine industry braced for further damage from China’s shock call for an anti-dumping investigation. Vote now in our poll.

An employee at a wine store selling Australian-made wine in Beijing. Picture: Noel Celis/AFP

AUSTRALIA’S $6 billion wine industry is bracing for China to announce an anti-subsidy case into the sector just a week out from its shock move to open an anti-dumping investigation into Australian wine imports.

China’s Minister of Commence is expected to announce the countervailing duties case this week to determine whether the Australian Government has unfairly subsidised our wine producers, in addition to investigating whether they have engaged in “dumping”, or selling wine below its normal value and therefore putting domestic wine producers at a disadvantage.

Australian Grape and Wine chief executive Tony Battaglene said the industry was 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.

But 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.

Agriculture Minister David Littleproud said Australia would vigorously defend the claims, asserting that Australian farmers were the second least subsided in the developed world behind only New Zealand.

China’s claims have fuelled arguments that Australian producers should look to diversify their export markets given the nation’s reliance on the Chinese. According to IBIS World, in 2019-20, China bought 39 per cent of Australian wine exports, more than 24 per cent of processed meat exports and 40 per cent of milk powder exports.

Australian National University Asian Bureau of Economic Research director Adam Triggs said this would happen naturally if Australian businesses increasingly saw China as a less dependable trading partner.

“It’s fair to say we’re seeing China become much less reliable as a trading partner and more willing to use trade for geopolitical purposes. But it’s difficult to call this. If that’s the attitude taken by business however, we will see business becoming less willing to trade with China and if they do, only for a premium,” Professor Triggs said.

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