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China wine tariffs ‘completely unjustifiable’, says Australian minister

New tariffs of up to 218% on Australian wines entering China are 'completely unjustifiable' and could lead to a case at the World Trade Organisation, Australia’s trade minister has said.

Trade minister Dan Tehan said China’s newly imposed import tariffs on Australian wines were ‘extremely disappointing and completely unjustifiable’.

He told a press conference, ‘I’ve spoken to the Australian wine industry this morning (27 March) and we will be looking at next steps, and those next steps will include looking at taking this matter to the World Trade Organisation.’

China’s ministry of commerce confirmed last week that it would impose tariffs at varying levels on imports of Australian wine in containers of two litres or less, following an anti-dumping probe.

Fewer Australian wines in China

Tariffs are understood to range from 116% to 218%, depending on the wine or company, and could stay in place for five years.

Penfolds owner Treasury Wine Estates said it was facing a ‘combined anti-dumping and countervailing duty rate of 175.6%’ on its Australian wines imported into China in containers of two litres or less.

Treasury has previously said it would seek to divert more wines to other countries in order to help protect itself from the new tariffs.

China is Australia’s biggest wine export market in value terms.

Tehan said at the 27 March press conference, ‘Tariffs of 116 to 218% mean that it’s basically impossible for Australian wine to be competitive in the Chinese market. [It’s] terribly disappointing for Chinese consumers and for the Australian wine industry.’

He added that Australia wanted to restore relations with China for the benefit of both countries.

Where did China’s wine tariffs on Australia come from?

China imposed interim tariffs on Australian wine imports in late 2020.

The tariffs follow an anti-dumping investigation by Chinese officials, which itself has come amid increasingly fraught trading relations between Australia and China more generally.

Diverting Australian wine supplies

Trade body Wine Australia said last week that this had already had a significant impact on exports.

Globally, Australian wine sales exceeded supply in the 2019-20 financial year, said the trade body last week. It clarified that its report preceded the beginning of China’s interim tariffs.

Wine Australia’s CEO, Andreas Clark, said the group’s newly published ‘wine production, sales and inventory report 2020’ showed that balancing supply with ‘demand opportunities’ was a key challenge facing wineries.

‘This is particularly important as wineries look to divert exports away from China, which predominantly bought our red wine, to other markets such as the USA and the UK, which have a higher demand for white wine,’ Clark said.

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