China said on Thursday it had imposed new import duties on Australian wine, accusing Canberra of subsidizing companies, in the latest round in a bitter stalemate after last month’s anti-dumping tariff fluctuation.
The move comes as relations between the two countries continue to deteriorate after Australia called earlier this year for an investigation into the origins of the COVID-19 outbreak, which first emerged in China one year ago.
The anti-subsidy tariffs of 6.3 to 6.4 percent will take effect Friday and will be in addition to November’s anti-dumping levies of 107 to 212 percent.
China’s Commerce Ministry said the move followed an investigation announced in late August based on a request from the China Wine Industry Association.
“The investigating authority has determined on a preliminary basis that there are subsidies on imported wines originating in Australia and that the domestic (Chinese) wine industry has suffered substantial damage,” the ministry said.
The ministry complained that Australian winegrowers are receiving government subsidies that give them an advantage over Chinese companies.
But Australia’s trade minister called last month’s measures “grossly unfair, unwarranted, unjustified”.
The end of the lucrative Chinese market?
Australian winemakers have warned that last month’s tariffs will likely spell the end of the lucrative Chinese market.
Treasury Wine Estates, which produces the popular high-end brand Penfolds, said it would look to other “key luxury growth markets” and cut costs as a result of China’s move.
At the end of last month, the company said it would divert hundreds of thousands of cases of wine destined for China to other countries to avoid high tariffs.
After Beijing imposed a 169.3% mark-up in an industry-wide anti-dumping investigation, the world’s largest listed winemaker said it would redirect sales of Penfolds to the United States, Europe, elsewhere in Asia and in the domestic market.
The move shows that a star of Australian consumer exports to China is rewriting its strategy almost overnight as a five-year-old free trade agreement between countries, under which tariffs on wine were cut. eliminated, giving way to strained diplomatic relations.
“We are moving forward with a plan … to develop markets outside of China, and that is what we will continue to do,” Treasury CEO Tim Ford said at the time. “A strategy of hope is not a very good strategy.”
Some of the wine to be redirected was already at the port of Shanghai. A quarter of the company’s Penfolds wine would be affected by the about-face, added the company, which makes about a third of its profits in China.
Laundry list of complaints
Relations between Australia and China have intensified this year, with Beijing producing a long list of complaints about Australian policy, including its ban on Huawei’s participation in 5G in the country.
Beijing also suspended beef imports from four Australian slaughterhouses in May and hit the country’s barley shipments with tariffs.
Australian Trade Minister Simon Birmingham told parliament on Wednesday that China does not adhere to a free trade agreement between the two countries or its obligations at the World Trade Organization and appeared to target Australian products. .
Australia had expressed concerns at a WTO meeting over China’s taking measures against barley, wine, meat, dairy, live seafood, logs, Australian wood, coal and cotton, he said.
The Chinese embassy responded by saying that comments on China’s joining the free trade agreement were “completely unfounded.”
China often shows economic strength in diplomatic disputes, with Australia being one of many countries to face its wrath recently in the form of trade restrictions.
Beijing last year suspended imports of Canadian canola, beef and pork, citing pests and health concerns, as relations deteriorated after the arrest of Huawei’s chief financial officer by Canadian authorities in 2018.