China could impose a 200 percent import tax on Australian wine. The Australian industry is concerned that this essentially means that they will lose the lucrative Chinese market.
Image courtesy of: Wine News
Given that Australia"s bottled wine exports to China will be worth A$1.1 billion in the 2020 financial year, Australian winemakers will have to pay an additional A$2 billion in taxes if the industry-wide tariffs are imposed.
Tony Battaglene, head of the Australian Grape and Wine Association, told the Advertiser: If our export tariffs (to China) reach about 200 percent, we will lose this (Chinese) market.
South Australia's wine industry will then be hit the hardest. in the 2019-20 financial year, South Australia's wine exports to China totaled A$814 million, accounting for 43% of the state's wine exports.
China has named 10 Australian companies in its anti-dumping investigation of the Australian wine industry, including six South Australian winemakers or winemakers based in South Australia.
Treasury Wine Estates, which produces Penfolds, and Casella Wines, which produces Yellow Tail, as well as Accolade, Australian Vintage, Yalumba, South Australian Wine Group, The Wine Company, Truffle Wine, Wingara Wine Group and Stoney were all included in the survey.
Bartag claims that three of the companies do not export wine. He also said that Australia has good reason to deny its claims of wine dumping into the Chinese market and that tariffs of up to 200 percent would only make the market unviable.
In a briefing prepared for the industry last week, Battaglen also warned that one of the worst-case scenarios is that China imposes temporary tariffs on Australian wine as soon as late October. However, the temporary tariffs will only last for four months.
If no interim tariff measures are implemented, the Australian wine industry will not be affected until China concludes its anti-dumping investigation in August 2021. If it is extended for six months, then China will complete its investigation in February 2022.
The investigation was launched last week by the Chinese Ministry of Commerce at the request of the China Alcoholic Drinks Association (CADA).
The China Wine Association believes that Australian wine is being dumped by as much as 202.7 percent. Shane Oliver, chief economist at AMP Capital, said that if Australian wines were subject to tariffs, their prices in China would inevitably rise sharply in response.
Battaglen also pointed out to the industry that China could impose additional countervailing duties on the entire Australian wine industry or individual exporters if the findings were unfavorable to Australia.