China taxes Australian wine at up to 212% amid diplomatic row

Australia’s trade minister has raised the idea of taking China to WTO over the new restrictions

China is one of the biggest market of Australian wine, accounting for 39 per cent in first quarter of 2020 (AFP via Getty Images)

China has decided to impose anti-dumping duties of up to 212.1 per cent on Australian wine imports starting from Saturday, in a move that is set to escalate trade tensions between the two countries.

The Chinese commerce ministry said on Friday that Australian wine companies will now have to pay an anti-dumping duty from 107 to 212 per cent of the value of their goods at customs, adding that it was in response to "substantive harm caused to the relevant domestic wine industry".

However, the ministry added these were “temporary measures” to stop subsidised imports of Australian wine.

The move comes after the Chinese ministry of commerce said in August that it would probe the allegations by the wine industry association of China that Australian companies were indulging in dumping – selling goods for less than it costs in the domestic market – throughout 2019.

The ministry has assigned different rates for various companies, along with setting a high tax on the Treasury Wine Estates Limited (TWE)  – which owns the popular Penfolds brands – making its stocks take a fall of more than 11 per cent before trade was halted on Friday.

Australia’s agriculture minister David Littleproud issued a statement on Twitter saying: “The Australian government categorically rejects any allegation that our wine producers are dumping product into China.”

Australia’s trade minister Simon Birmingham said the tariffs were unjustifiable and it was a distressing time for hundreds of wine producers because it “will render unviable for many businesses, their wine trade with China”.

Mr Birmingham has raised the idea of taking China to the World Trade Organisation (WTO) over the restrictions.

China is the biggest destination for Australia's wine exports, accounting for 39 per cent in the first nine months of 2020, according to Wine Australia. The exports hit a record A$1.3 billion (US$900 million) in 2019, according to the Australian government.

Beijing’s latest move comes against a backdrop of worsening political relations between the countries after Canberra backed an international inquiry into the origins of the coronavirus in April.

The ongoing tensions have led to China halting imports of beef from four Australian slaughterhouses and levying additional tariffs on barley imports from the country.

Beijing has also warned people not to visit Australia for study or tourism, alleging anti-Asian racism in the wake of the pandemic.

The two sides are also locked in an ongoing row over spying, with China accusing Australia of raiding the homes of Chinese journalists as Canberra investigates an alleged covert influence campaign by Beijing.