Trade Minister Simon Birmingham.Credit:Alex Ellinghausen
China's Ministry of Commerce on Friday issued the preliminary ruling after China's drink industry accused Australian producers of dumping discounted wine into China,reducing the competitiveness of local producers.
The ministry announced it would apply a tariff rate of between 107 per cent and 212 per cent on Australian wines.
Australian wine is just one product that has become hostage to Beijing's trade tactics and "grievances".Credit:
The ministry said it had conducted investigations in strict accordance with relevant Chinese laws and regulations and World Trade Organisation rules. The Australian government and the local wine industry have strongly denied the allegations.
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Australia exports $1.2 billion of wine to China each year and wine industry leaders scheduled urgent talks on Friday afternoon with Senator Birmingham to discuss China’s tariff move.
Australian Grape and Wine chief executive Tony Battaglene said that wine produced by companies that registered for China’s anti-dumping investigation would receive a tariff of between 107 per cent 167 per cent.
Australia Swan Vintage will have the lowest tariff rate of any of the producers targeted. It lists former Australian ambassador to Beijing,Geoff Raby,who has promoted greater dialogue and business links with China during the trade dispute,as its brand ambassador.
Australia’s biggest wine company Treasury Wine Estates,a major exporter to China,was among the companies that participated in the investigation.
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Shares in ASX-listed Treasury Wine tumbled 11.3 per cent to $9.23 as news emerged of the Chinese decision,wiping almost $845 million from its market capitalisation before it went into a trading halt.
"We don’t see it’s justified and we’re obviously deeply concerned about what it does,"Mr Battaglene said of the tariff move.
"It’s all rather academic up around those levels anyway. Because once you’re up at 160,200 per cent,essentially it’s going to be very difficult to sell product that consumers are prepared to pay for,"he said.
Australia has the biggest market share in China of all wine-exporting nations. Australia also has many wine producers that export wine only to China.
"I think it will have a serious impact,"Mr Battaglene said.
"I mean,it’s very difficult to see that you can be hit with a tariff that size and still maintain the market size that we have. Obviously,we’ve got some high valued product there,and if the consumer is willing to pay for that then that’s good,but it will have a margin impact."
Treasury Wine subsequently issued a second statement to the ASX requesting a trading halt in its shares that could last until next Tuesday,so that it could digest the tariff announcement.
"TWE is reviewing the details of the provisional measures as a matter of urgency in order to update the market,"Treasury said.
The $7.5 billion wine giant does not disclose the value of its China sales,but it is believed that Treasury generates hundreds of millions of dollars in revenue in the China market.