China aims at Australian wine imports in latest retaliatory move

By Rahul Vaimal, Associate Editor
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From this weekend, China is set to impose anti-dumping duties of more than 100 percent on Australian wine, adding to a series of sweeping trade reprisals and further escalating tensions between the two countries.

The anti-dumping deposits, the Chinese Ministry of Commerce said in a statement, will take effect from November 28 and range from 107.1 percent to 212.1 percent. Australia responded by warning China that its actions could create a perception that trade with China is risky among businesses and countries around the world.

The import taxes come just three months after China launched its anti-dumping and anti-subsidy inquiry into Australian wine, and also follows a number of other measures banning imports from coal to copper to barley.

According to government marketing body Wine Australia, China is the biggest buyer of Australian wine, importing $880 million in the year through September. That’s 167 percent higher than the value of its next biggest market, the US.

In response to China’s announcement, Australia said it would seek WTO’s (World Trade Organization) intervention to protect itself from the tariffs called “grossly unfair, unwarranted, unjustified,” by Trade Minister Simon Birmingham.

Businesses and countries outside of China viewing Beijing’s backlash against Australia this year would see the “potential that their trade, their businesses, can be disrupted through these sort of unwarranted, unsanctioned actions that frankly don’t stand up,” Mr. Birmingham said.

Long-running spat

The two nations have been in a deadlock since 2018, when Canberra barred Huawei Technologies from building its 5G network. Adding to grievances is Prime Minister Scott Morrison’s call for an inquiry into the origins of the coronavirus outbreak, a move that bruised China’s pride and unleashed a torrent of criticism that Australia is a puppet of the US.

“This latest hit by the Chinese government shows Beijing is determined to teach Australia a lesson that can reverberate globally,” said analysts “While it’s important for Australia not to cave into this pressure, it also shows how the nation’s traders have no option but to quickly recalibrate and diversify their markets.”

This week, Mr. Morrison tried to release some of the pressure, giving a speech praising China for pulling its people out of poverty. Australia, he said, wants a relationship that is “mutually beneficial” and insisted that his government does not side with the US to contain China. The Ministry of Foreign Affairs in Beijing noted the “positive comments.”

“Beijing is saying that Scott Morrison’s speech this past week was simply not enough, and so China wants to keep the trade pressure on,” said James Laurenceson, director of the Australia-China Relations Institute at the University of Technology in Sydney.

Troubled Australia

Since the ruling applies to wine shipped to China in containers of up to two liters, Australian exporters may be able to circumvent duties by shipping bulk wine to the country and bottling it there, experts note. They expect that within a year or two, a “good proportion” of the product that the country used to ship to China could be sold elsewhere.

Australia is the most China-dependent developed economy in the world. Moreover, it is in the midst of first recession in nearly 30 years. After China announced two trade probes earlier this year, Australian wine has already been piling up in the country. As the diplomatic dispute cut into trade, more than 50 vessels carrying at least $500 million in Australian coal have also been stranded near Chinese ports.