China has launched an anti-dumping investigation into imported bottled wines from Australia, the country’s Ministry of Commerce announced on Tuesday (18th Aug).
The investigation will look into whether Australian producers have dumped ‘wines in containers holding 2 litres or less’ into the Chinese market below fair market value during the time period between Jan 1st 2019 to Dec 31st 2019.
An additional investigation on the injury to the domestic industry will focus on the time period from the beginning of 2015 until the end of 2019.
The investigation was launched amid rising political tension between China and Australia, causing further uncertainties to the wine trade of both nations, which are still suffering from the impact of Covid-19 earlier this year.
‘We received an application from the domestic wine trade on 6th July requesting an anti-dumping investigation on imported wines from Australia,’ said ZHAO Lijian, deputy director of the Chinese Ministry of Foreign Affairs Information Department in a press session on 18th August.
‘A stable relationship between China and Australia is in line with the mutual benefit between the two countries, though that depends on efforts from both parties,’ said Zhao, who denied a link between the anti-dumping investigation and the disputes between the two nations over a number of political issues recently.
Zhao stressed that relevant government departments will conduct the investigation in a ‘fair and just manner in accordance with the law’.
The incident coincides with China’s anti-dumping investigation into wine imports from the European Union in 2013 as a (though never officially admitted) countermeasure against the EU’s threat to raise tariffs on solar panels entering the EU from China.
China agreed to end the probe in March the year after following a series of negotiations with the EU.
The context: Australia and China wine trade relations
Taking advantage of the China-Australia Free Trade Agreement (ChAFTA) signed in 2015, wines from Australia are exempt from import tariff from the beginning of 2019.
Chinese customs figures show that Australia has now replaced France to become China’s biggest source of imported bottled wines. Mainland China is also the number one export destination by value for Australian wine, according to Wine Australia.
A total of 53,946,300 litres of wines worth 317,508,700 USD were imported from Australia into Mainland China in the first six months of 2020, according to China’s Association for Imports and Export of Wine Spirits (CAWS).
Though still suffering a significant drop in volume from the same period last year, wines from Australia are amongst the fastest recovering categories post-lockdown in China’s imported market compared to other major wine-producing nations.
Responses from the trade
The share price of Treasury Wine Estates (ASX: TWE) plunged from 12.31 AUD to 10.60 AUD when the news broke on Tuesday morning (GMT+10). By the time of writing, its share price has dropped to 9.68 AUD (Source: Google), showing the initial impact of the anti-dumping investigation on producers.
The Penfolds owner said that it ‘remains committed to China as a priority market and will continue to invest in its Chinese business and its relationships with customers and consumers.’
‘The case is in its early stage of development,’ Matthew Gong, spokesperson at ASC Fine Wines told Decanter.com.
The Suntory-owned importer is distributing multiple Australian wine brands including Henschke, Brown Brothers, Yalumba and Leeuwin Estate in Greater China.
‘We are in close coordination with our supplier partners in Australia, we will offer our due cooperation with requests from the authorities in line with the laws, regulations and policies concerned,’ he said.
Wine Australian said it is ‘aware’ of the investigation.
‘We believe that the Australian grape and wine sector is well placed to respond to this investigation and Australian Grape & Wine and our exporting companies will cooperate fully,’ said the national association in an official statement.