Australia has responded defiantly to China imposing anti-dumping tariffs on Australian wine, saying the "seriously concerning development" looks to be about diplomatic grievances and not any action by winemakers.
Bottles of Australian wine are seen at a store selling imported wine in Beijing, China November 27, 2020. REUTERS/Florence Lo
China will impose temporary anti-dumping tariffs of 107.1% to 212.1% on wine imported from Australia from Nov. 28, the Chinese Ministry of Commerce said on Friday.
Australia's trade minister Simon Birmingham said the tariffs were unjustifiable and it was a distressing time for hundreds of wine producers because it "will render unviable for many businesses, their wine trade with China".
China takes 37 per cent of Australia's total wine exports, an industry worth AU$2.9 billion, the government said.
Last week China outlined a list of grievances about Australia's foreign investment, national security and human rights policy, saying Canberra needed to correct its actions to restore the bilateral relationship with its largest trading partner.
"China's recent comments gives the perception that it's more about their grievances around those matters, rather than in fact around anything any industry has done wrong," Australia's agriculture minister David Littleproud told media on Friday.
He added, "It just doesn't worry Australian exporters, it worries exporters from around the world."
China's foreign ministry spokesman Zhao Lijian said on Friday that the measures were in line with Chinese laws and regulations and urged Australia to do more to enhance mutual trust between the countries. "They should think about whether they have respected China's interests," he said.
China began an anti-dumping probe in August at the request of the Chinese Alcoholic Drinks Association, but in Canberra the preliminary decision to impose tariffs was viewed as part of a pattern of punitive trade measures since Australia called for an independent inquiry into the origins of the coronavirus.
Birmingham pointed to "the cumulative impact of China's trade sanctions against a number of Australian industries" and said if they were a response to other factors this would be "completely incompatible with the commitments China has given" to the World Trade Organisation.
This year China has imposed tariffs on Australian barley, suspended meat imports, and Chinese importers were told to expect customs delays across seven categories of Australian products from coal to seafood from November.
Importers bringing in Australian wine will need to pay deposits to China's customs authority, which will be calculated based on different rates the authority has assigned to various companies, according to the statement.
The rate required of Treasury Wine was 169.3%, the highest among all the named wine firms in the statement. Shares of Australia's Treasury Wine Estates Ltd, the world's largest listed winemaker, fell more than 13% before being put on a trading halt pending an announcement.
The measures had the potential to close down the Chinese market to Australia, said Tony Battaglene, CEO of Australian Grape & Wine Inc, the country's main industry body.
"Some will keep going (selling) very high priced wine if people are prepared to pay for it. But it becomes very tough when you're competing with wine where they're paying 12% or 14% tariffs, or zero tariffs in the case of Chile and New Zealand, and you're paying 200%. Everyone is going to be scrambling now, looking for other markets."
An importer of Australian wine in Shanghai told Reuters:"I will stop importing Australian wines for at least 3 months to see how things go. Many importers will stop the business, according to what I know, because it is simple not workable with such a deposit."
Casella Wines will require a 160.2% deposit, Swan Vintage will require 107.1%. For Australian wines that are not named on the list, the rate is 212.1%.
The Australian government will hold a meeting with winemakers on Friday.