Aussie wine exports under threat as China imposes harsh tariff regime

Aussie wine exports under threat as China imposes harsh tariff regime

More than a third of Australia's wine exports are under threat after China imposed harsh tariffs on wine imports of two litres or less.

The move is the latest in the escalating cold war between China and Australia and follows a Chinese investigation that found Australian producers guilty of flooding its market with cheap wine.

As such, preliminary tariffs of between 107.1 per cent and 212.1 per cent have been imposed on Australian wine.

The decision had immediate impact on Australia's largest wine group, Treasury Wine Estates (ASX: TWE), leading to a slump of more than 11 per cent in its shares today ahead of a trading halt requested by the company. Treasury is currently preparing a response to today's developments.

The decision impacts more than $1 billion in wine exports to China, which accounted for more than a third of Australia's wine exports last financial year.

The Federal Government was quick to reject China's claims of any wrongdoing.

"The fact is Australia produces amongst the least subsidised product in the world and provides the second-lowest level of farm subsidies in the OECD," says David Littelproud, the Minister for Agriculture.

"Today's decision is a seriously concerning development and one which Australia will be vigorously fighting against.

"The Australian Government categorically rejects any allegation that our wine producers are dumping product into China, and we continue to believe there is no basis or any evidence for these claims."

Littleproud says the government will continue working with the wine industry and Chinese authorities as part of the ongoing dumping investigation. He has not indicated whether Chinese authorities are taking his phone calls at the moment.

"But we will of course consider all of our options moving forward," Littleproud says.

"Australian wine is hugely popular both in China and across the globe due to its high quality and we are confident that a full and thorough investigation will confirm this."

The simmering tensions with China flared up in May after Australia led the call for a full investigation into the source of COVID-19. 

China threatened to boycott Australian beef, wine and international student markets. That list of products has expanded since to include coal, barley, copper ore and concentrate, sugar, timber and lobsters.

China's investigation into alleged dumping of cheap wine into its domestic market in 2019 was announced in August this year and was expected to take 12 months to complete.

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