China imposes additional duties on Australian wine

China has imposed fresh duties on Australian wine, the latest salvo in a bitter standoff between the two countries.

Some Australian wine companies plan to look for new markets after Beijing slapped them with hefty tariffs. [File: Martin Pollard/Reuters]

China on Thursday said it had imposed fresh import duties on Australian wine as it accused Canberra of giving firms subsidies, in the latest salvo in a bitter standoff following last month’s swinging anti-dumping tariffs.

The move comes as relations between both countries continue to sour after Australia called earlier this year for an inquiry into the origins of the COVID-19 outbreak, which first emerged in China a year ago.

The anti-subsidy tariffs of 6.3-6.4 percent will take effect on Friday and come on top of November’s anti-dumping levies of 107-212 percent.

China’s commerce ministry says the move followed a probe announced in late August which was based on a request from the China Wine Industry Association.

“The investigation authority has preliminarily determined that there are subsidies for imported wines originating in Australia, and (China’s) domestic wine industry has suffered substantive damage,” the ministry said.

The ministry has complained that Australian winemakers benefit from government subsidies that give them an advantage over Chinese firms.

But Australia’s trade minister called last month’s measures “grossly unfair, unwarranted, unjustified”.

An end to the lucrative Chinese market?

Australian winemakers have warned that last month’s tariffs would probably mean an end to the lucrative Chinese market.

Treasury Wine Estates, which produces the popular high-end Penfolds brand, said it would look to other “key luxury growth markets” and cut costs as a result of China’s move.

Late last month the company said it would divert hundreds of thousands of cases of China-bound wine to other countries to avoid hefty tariffs.

After Beijing imposed a 169.3 percent mark-up as part of an industry-wide anti-dumping investigation, the world’s largest listed winemaker said it would redirect Penfolds sales to the United States, Europe, elsewhere in Asia and domestically.

The move shows a star of Australian consumer exports to China rewriting its strategy almost overnight as a five-year-old free trade agreement between the countries, under which wine tariffs were eliminated, gives way to strained diplomatic relations.

“We are moving on with a plan … to build the markets outside of China, and that’s what we’ll continue to do,” said Treasury CEO Tim Ford at the time. “A strategy of hope’s not a very good strategy.”

Some of the wine to be redirected was already in port in Shanghai. A quarter of the company’s Penfolds wine would be affected by the about-face, added the company, which makes about a third of its profit in China.

Laundry list of complaints

Australia-China relations have spiralled this year, with Beijing producing a laundry list of complaints about Australian policies, including its ban on Huawei’s participation in 5G in the country.

Beijing also suspended beef imports from four Australian slaughterhouses in May and hit barley shipments from the country with tariffs.

China has already suspended some Australian beef imports amid a deepening spat with the country [File: William West/AFP]

On Wednesday, Australia’s trade minister, Simon Birmingham, told parliament China was not adhering to a free trade agreement between the two nations or its World Trade Organization obligations and appeared to be targeting Australian products.

Australia had raised concerns at a WTO meeting about China taking measures against Australian barley, wine, meat, dairy, live seafood, logs, timber, coal and cotton, he said.

The Chinese embassy responded by saying the comments about China’s adherence to the free trade agreement were “totally unfounded”.

China frequently flexes its economic muscle in diplomatic disputes, with Australia being one of several countries recently to face its wrath in the form of trade restrictions.

Beijing last year suspended imports of Canadian canola, beef and pork, citing pests and health concerns, as relations soured following the arrest of Huawei’s chief financial officer by Canadian authorities in 2018.

Source: News Agencies