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China imposes provisional tariffs on Australian wines

China's government has announced provisional tariffs of up to 200% on Australian wine imports, underlining how trade relations between the two countries have turned sour.

Customs officials in China have imposed provisional tariffs ranging from 107.1% to 212.1% on imports of bottled Australian wine, in containers holding two litres or less.

China’s Ministry of Commerce (MOFCOM) said on 27 November that the ‘initial findings’ of an anti-dumping investigation into Australian wine showed that there has been ‘material injury’ to the domestic wine industry.

However, the provisional levies can still either be lifted or become definitive when the ongoing anti-dumping investigation reaches a conclusion.

The move is a blow to Australia’s wine industry, which counts Mainland China as its biggest export market by value, and adds further tension to already-strained relations between China and Australia (see original story below).

‘These are preliminary tariffs, and both the anti-dumping and countervailing duties investigations are ongoing,’ said Tony Battaglene, Chief Executive of Australian Grape & Wine in a latest announcement.

‘While we are disappointed with this development, our members will continue to cooperate with MOFCOM as the investigation continues, working towards an outcome that is consistent with the facts of the case, and supports the growth of the wine industry in Australia and China.’

Different tariff rates have been placed on individual companies in some cases.

Treasury Wine Estates, which makes Penfolds and Wolf Blass wines, said, ‘The Provisional Measure states that, commencing from 28 November 2020, a deposit at a rate of 169.3% will be applied to the imported value of TWE’s wine in containers of two-litres or less.’

It said that it would continue to engage respectfully with MOFCOM during its investigation.

But it said demand for its wines in China were expected to be ‘extremely limited’ while the provisional tariff remains in place.

Among the other firms listed by MOFCOM, Casella Wines and Australia Swan Vintage faced provisional rates of 160.2% and 107.1% respectively. For wine producers not named on the list, the preliminary rate was 212.1%.

Treasury Wine Estates’ CEO, Tim Ford, said, ‘We are extremely disappointed to find our business, our partners’ businesses and the Australian wine industry in this position.

‘We will continue to engage with MOFCOM as the investigation proceeds to ensure our position is understood. We call for strong leadership from governments to find a pathway forward.’

Tension rises with rumour China may halt Australian wine imports

Written 6th November 2020 by Sylvia Wu. 

Australian wineries have faced growing uncertainty over one of their largest export markets amid speculation that China was considering suspending imports, but there has been no official confirmation.

Speculation has emerged that Chinese officials were considering suspending Australian wine imports, following a period of mounting trade tension between the two countries.

Yet nothing has been confirmed and a Chinese government spokesperson declined to comment directly on the issue at a press conference to mark the beginning of the annual China International Import Expo today (5 November).

Mainland China is the biggest export market by value for Australian wines.

‘The information circulating is that a number of Australian industries (including wine) have been informed that their imports will not be cleared through customs on or after Friday 6 November,’ Tony Battaglene, chief executive of trade body Australian Grape and Wine, told Decanter.com

‘There has been no official notification of suspension of wine imports from either Chinese or Australian government officials,’ he said. 

However, importers in China have been requesting that Australian exporters suspend shipments until further notice.

‘No notification from Chinese authorities’

Treasury Wine Estates (TWE), which owns Penfolds, said yesterday that it was aware of speculation about an embargo but that the company ‘has not had any advice or notification from the Chinese authorities in relation to this and is not in a position to comment on those reports at this point in time’.

Separately, TWE said that it ‘has been advised’ that the China Alcohol Drinks Association has asked the country’s Ministry of Commerce to apply ‘retrospective tariffs’ to Australian wines imported in containers of two litres or less. It was not known whether the request would be accepted.

China’s commerce ministry launched an anti-dumping probe into Australian wines earlier this year, citing possible ‘injury to the domestic industry’. 

Speculation about more drastic measures against Australian wines emerged on the eve of the 2020 China International Import Expo (CIIE). The annual event, held between 5 and 10 November this year, has attracted a number of Australian producers and institutions.

TWE is an official exhibitor at this year’s CIIE and the group told Decanter.com that it was set to launch the Penfolds Bin 389 ‘Year of the Ox’ as planned.

China-based importer ASC Fine Wines also said that it had received ‘no notice or advice from the official channels’.

Biggest export market

Mainland China accounts for nearly 40% of Australian wine exports by value, and shipments rose by 4% to A$1.17bn in the 12 months to the end of September, according to Wine Australia. 

While demand for premium wine was particularly strong, exports to China dropped by 12% in volume terms, to 123m litres. 

Comments from Chinese authorities

Besides wine, there has been speculation about an import embargo on Australian coal, barley, copper, sugar, timber and lobster.

In a press conference held by China’s Ministry of Foreign Affairs today (5 November), reporters asked for clarification over the information that China is seeking to apply restrictions over importing coal, wine and sugar from Australia.

Spokesperson Wang Wenbin did not confirm or reject this information. Instead, he emphasised that the Chinese authorities apply inspection and quarantine measures on imported products ‘in accordance with laws and regulations’.

He quoted Chinese president Xi Jinping’s opening speech at CIIE, ‘Through the CIIE and other platforms of opening up, we will continue to support companies from around the world in exploring business opportunities in China.’

He repeated that ‘mutual respect’ is the foundation for practical cooperation between countries, and urged the Australian government to ‘do more to enhance mutual trust and bilateral cooperation, as the China-Australia comprehensive strategic partnership calls for, and bring the bilateral relations back to the right track as early as possible’.

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