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How will China's wine tariffs impact Australian producers?

Team Veye | 08 Dec 2020

How will China's wine tariffs impact Australian producers?

An immediate fallout of China's decision to impose tariffs of up to 212% on Australian wine imports is that it has endangered its business with mainland China.

Though the Chinese Ministry of Commerce (MOFCOM) has said that duties imposed should last no more than four months but could be extended to nine months. Australian wine has been having zero tariffs since 2019 under the China- Australia free trade agreement.

At the time of taking this decision, China's Commerce Ministry had announced that it was made after finding preliminary evidence of dumping. While protesting this move, Australian officials have maintained that China has not been able to provide proof. The move could be seen as a repercussion of hardening relations between the two countries.

After the imposition of tariffs, orders were either being suspended or being cancelled altogether. In some extreme cases, some container ships that were en route to mainland China had to turn back to Australia or were being diverted, after the announcement.

According to Australian Grape and Wine, a national association, around 800 wine producers in Australia have "built their businesses" around exporting to China and were now left with no backup plan.

China is Australia’s biggest export market. Australia had been exporting 39 per cent of its wine exports to China and only 15 and 14 per cent to the United States and Britain respectively.

Australian wine producers were also being urged to increase their exports to Britain. Britain's thirst for Australian wine was only growing. In the past one year, sales of Australian wine in Britain grew by 10 per cent to be worth $1.3 billion, according to market research and data company IRI. The emergence of Europe as a strong market could be particularly comforting to small producers.

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