A record plunge in consumption as the country went into lockdown led to its first recession in nearly 30 years.
China will impose temporary anti-dumping measures on wine imported from Australia from November 28, the Ministry of Commerce said on Friday, in a move likely to further escalate trade and diplomatic tensions between Beijing and Canberra.
Importers suspected of bringing in products to be sold below cost price in order to gain market share – a process known as dumping – 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 duties come three months after China started an anti-dumping and anti-subsidy investigation into Australian wine, and follow a raft of other measures barring imports from coal to copper to barley this year.
Beijing’s latest move comes against a backdrop of worsening political relations between the countries after Canberra called for an international inquiry into the origins of the novel coronavirus.
China is the top market for Australian wine exports and is also Australia’s largest trading partner, with two-way trade worth 235 billion Australian dollars ($170bn) last year.
China in August began an anti-dumping probe into imports of Australian wine at the request of the Chinese Alcoholic Drinks Association. Earlier this month, the association called for retrospective tariffs on Australian wine imports.
The anti-dumping deposits announced on Friday range from 107.1 to 212.1 percent, the Ministry of Commerce said in a statement.
The rate required of Treasury Wine was 169.3 percent, the highest among all the wine firms named in the statement.
Shares of Australia’s Treasury Wine Estates Ltd, the world’s largest listed winemaker, fell more than 13 percent before being put on a trading halt pending an announcement.
The company said it is reviewing details of the provisional measures “as a matter of urgency” in order to update the market.
“We don’t believe there is any case to answer, so without seeing the details, obviously it’s disappointing,” said Tony Battaglene, chief executive of industry group Australian Grape and Wine, noting that he had yet to see the Chinese statement.
China’s commerce ministry did not specify how long the measures would last for. It said that it looked into samples from a few Australian firms, including that of Treasury Wines, Casella Wines and Australia Swan Vintage.
“Obviously we’ll vigorously defend this,” Australian Agriculture Minister David Littleproud told reporters, adding that the tariffs were “quite outrageous.”
“We’ll exhaust all avenues available to us through the WTO,” he added.
A spokesman for Australia’s Minister for Trade Simon Birmingham did not immediately respond to a request by the Reuters news agency for comment.
The two nations have been in a deadlock since 2018 when Canberra barred Huawei Technologies Co from building its 5G mobile phone network. Adding to the grievances was Prime Minister Scott Morrison’s call for an inquiry into the origins of the coronavirus outbreak, a move that bruised China’s pride and unleashed a torrent of criticism that Australia is a puppet of the US.
“This latest hit by the Chinese government shows Beijing is determined to teach Australia a lesson that can reverberate globally,” John Blaxland, a former intelligence officer who’s now a professor in international security at the Australian National University, told the Bloomberg news agency.
“While it’s important for Australia not to cave into this pressure, it also shows how the nation’s traders have no option but to quickly recalibrate and diversify their markets.”
Morrison sought this week to release some of the pressure, giving a speech that praised China for pulling its people out of poverty. Australia, he said, wants a “mutually beneficial” relationship and insisted his government isn’t siding with the U.S. to contain China. The Ministry of Foreign Affairs in Beijing noted the “positive comments.”