Small exporters, grape growers and regional communities are suffering the brunt of China’s decision to impose steep tariffs on Australian wine. This is according to Tony Battlegene, the chief executive of Australian Grape and Wine, the national association of grape and wine producers.
China’s Ministry of Commerce on Friday announced initial anti-dumping duties on Australian bottled wine imports from 107% to 212%, which became effective the following day. Following is China’s anti-dumping investigation of alcohol imports from Australia earlier this year.
“It’s going to have a devastating effect,” Batglyn said on CNBC’s “Squawk Box Asia” on Monday. He clarified that large Australian wine exporters, which have diverse divisions, would likely be able to withstand China’s decision, regardless, if they would feel the pain.
“It’s the grape growers, it’s the regional community and it’s the small exporters who have little ability to accommodate. They are the ones who are going to suffer,” said Batgelein.
He said it is not easy to enter other markets on short notice because it takes time, relationships and money to develop those markets. “We don’t have that. It’s the peak time of our exports – 50% of our product moves into China in the last four years of the year. It’s discontinued. So this product has yet to go anywhere else.”
Battaglin dismissed Beijing’s claims surrounding the dumping, stating that China is the “highest price-point market” for Australian wines, with exporters making more money in terms of dollars per liter than elsewhere.
He said, “In China we have higher margins, so we’re obviously not dumping there. If anything, we’re doing it. So it’s obviously ridiculous and we don’t understand that Why would you suggest that. “
China is the top wine export destination for Australia. According to Wine Australia, it accounted for 39% of total exports for the 12 months ending in September 2020.
Bottles of wine imported from Australia are on sale on November 27, 2020 at a supermarket in Hangzhou, Zhejiang Province, China.
Long v | VCG | Getty Images
Many of the smaller wine exporters in Australia, particularly those that export to China in particular, are also funded by Chinese money, according to Battaglene. He explained that those exporters as well as importers in China should also be affected by the tariffs.
Australia’s Trade Minister Simon Birmingham told reporters on Monday that there is a series of working through disputes with Chinese agricultural officials, Chinese customs officials or eventually with the World Trade Organization.
“But we have also acknowledged that what has happened to China has a cumulative effect, the personal action that China has taken against Australian trade during this year is a matter of concern,” he said. Negotiations with China and trying to resolve the issue.
Australia’s Agriculture Minister David Littlepad on Friday tweeted that the Canberra government is “extremely disappointed” in China’s decision to impose an initial fee on Australian liquor.
“The fact is that Australia produces the least subsidized product in the world and provides the second lowest level of agricultural subsidies in the OECD,” Littleprad said. He added that the Australian government “categorically denies any allegations by our wine producers of dumping products in China, and we do not consider these claims to be the basis or any evidence.”
Bilateral relations between Canberra and Beijing soured earlier this year when Australia backed a growing call for an international investigation into China to combat the coronavirus epidemic.
China took a number of measures against Australian exporters, including anti-dumping and anti-subsidy duties on Australian barley, import restrictions on many red meat slaughterhouses and reportedly state-owned utilities and steel to curb Australia’s coal. Giving oral notice to the mills. Last month, two cotton industry groups in Australia said that China had begun preventing its spinning mills from using imported cotton from down under.
Economists have said that any potential import restrictions from China will have a major impact on Australia’s mining exports as it takes up a large part of the export basket. According to Oxford Economics, most Chinese iron ore imports, which are essential in steelmaking, are sourced from Australia. It said that given the difficulty of finding alternative sources in the short term, China has not yet enforced stringent regulations on Australia’s iron ore exports.
According to government data, Australia remains the world’s largest trading partner in goods and services, accounting for about 27.4% of the world’s trade in goods and services.
Earlier this month, both China and Australia became signatories of the world’s largest trading bloc – the Regional Comprehensive Economic Partnership or RCEP.