China-Australia relations: Australian wine exporters face fresh blow after Beijing imposes tariffs

At least 75 containers of Australian wine that have been stuck at Chinese ports since the start of November after a wide-ranging import ban on Australian products will now face a second blow of anti-dumping duties of up to 212.1 per cent.

Chinese trade consultants, importers and their agents said the containers holding various labels, many from South Australia which is the home of the Barossa Valley wine region, have been frozen in Shanghai and Ningbo ports since November 6, when the Chinese government verbally suspended seven Australian products, namely barley, sugar, coal, copper, log timber, lobsters and wine.

On Friday, Australian trade minister Simon Birmingham said those wine shipments, which have not yet cleared Chinese customs, will be subject to the new tariffs that could render Australian wine largely unmarketable and unviable in the Chinese market.

Get the latest insights and analysis from our Global Impact newsletter on the big stories originating in China.

South Australian wine exporter Michele, who did not want to give her full name, said she felt fortunate she pulled her shipments out in time but defeated by the prospect of lost business.

She would be looking to sell wines from other countries to her Chinese customers to keep her client base, as well as focus on sales in the local Australian market. But she feared many exporters would possibly go out of business.

"All our hard work, commitment and investment in the relationship of our clients in China have been in vain," she said.

"The whole industry is devastated. Business and ordinary people suffer from politicians' failure in handling diplomacy. Let's see what the governments will do now to give us back hope."

Graeme Shaw, owner of Shaw Wines, said that the duties were totally unjustified and that the Chinese authorities had little basis for imposing them, especially since Australian wine had been one of the most lucrative traded in China, with the value of sales running high over the past 12 months despite the coronavirus pandemic.

China's commerce ministry announced on Friday that it would impose provisional anti-dumping duties starting on Saturday, even though its investigation into whether Australian wine was being systemically dumped at low prices would not finish until next August.

The completion of key investigation questionnaires two weeks ago has led the Chinese ministry to take the provisional measures, which was usually aimed at levelling trading until the final outcome is released.

The duties will range from 107.1 to 212.1 per cent, with specific winemakers such as the owner of the popular Penfolds label, Treasury Wines Estate, facing a 169.3 per cent tax.

Imposing the temporary duties ahead of the conclusion of the anti-dumping investigation, which is due in August next year, the commerce ministry said "there is a causal relationship between [wine] dumping and material damage".

Casella Wines, known for another popular label in China and Asia, Yellow Tail, will face a 160.2 per cent duty, while Accolade Wines, owner of Hardys Wines, will face a 160.6 per cent levy. Other well-known wine exporters such as Australian Vintage and Brown Brothers will face roughly the same duty.

Those not specifically listed will have to pay an interim duty of 212.1 per cent, higher than the 202.7 per cent duty originally pitched by the Wine Industry Association of China when it precipitated the anti-dumping investigation in August after lodging its dumping complaint.

The provisional duties will be applied to all Australian wine exports in containers of less than two litres.

The impact of the duties has also cascaded through wine trading supply chains in China.

In Nanjing, an importer said he was looking to redirect his uncleared Australian wine imports into a bonded warehouse with plans to sell the wine, bottle by bottle, on e-commerce websites, which was a way to get around the high anti-dumping import duties.

In Guangzhou, a major fine wines importer cancelled a "massive" Australian wine sales promotion after the anti-dumping duties were announced.

"The cost of Australian wine imports will increase by at least 10 times. In view of this unexpected situation, we apologise for cancelling our promotion," the company told its client on WeChat.

"We recommend customers consider replacing Australian wine with those from Chile, Argentina and others."

In its provisional findings, the Chinese ministry of commerce cited various financial programmes and grants offered by the Australian government to turn its wine industry into an export powerhouse in China.

These subsidies and grants can also lead to further countervailing duties as part of a second joint investigation that is also due to conclude in August 2021.

This article originally appeared on the South China Morning Post (SCMP).

Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.