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China considers imposing tariffs on Australian wine

CANBERRA, Australia

China on Tuesday began investigating whether Australia is dumping wine in a trade dispute that further strains relations between the countries and could shut the biggest export market for Australian wine.

The Chinese Ministry of Commerce said the anti-dumping investigation involved wine in containers of 2 liters (68 fluid ounces) or smaller imported from Australia from Tuesday.

The Australian government denied subsidizing exporters.

“We do find this deeply troubling, concerning and perplexing given Australia’s wine industry is not subsidized to export and it’s certainly not dumping product on the world market,” Trade Minister Simon Birmingham said. “Now it’s for China and Beijing to explain the rationale behind these actions and why they have moved to that stage of an investigation.”

China’s only other anti-dumping investigation of Australian products effectively closed the China market to Australian barley in May through crippling tariffs. Australia is appealing that decision.

The investigation of Australian wine exports, which made 1.1 billion Australian dollars ($795 million) from the Chinese market last year, could take between a year and 18 months.

Birmingham said he hopes China will not impose interim trade measures during the investigation.

China’s decision to shut out Australian barley a week after it banned beef exports from Australia’s four largest abattoirs over labeling issues has been linked to Australian calls for an independent investigation into the source of the coronavirus as well as responses to the pandemic.

Chinese Ambassador to Australia Cheng Jingye warned in an Australian newspaper interview in April that Australian wine could be targeted in a Chinese consumer boycott if the government persisted with its call for a coronavirus inquiry.

Asked if the wine investigation was a political tactic, Birmingham told reporters, “That’s really a question for China.”

“Our hope and expectation is that these matters should be considered and addressed on their merits and that means that Beijing and Chinese authorities should look at the evidence,” Birmingham said.

Graeme Shaw, owner of Shaw Wines outside Canberra, said Chinese tariffs would have a considerable effect on large Australian wine producers.

“I think the industry should have been expecting something from the comments from the Chinese ambassador,” Shaw told Nine Network television news.

Weihuan Zhou, a University of New South Wales international trade expert, suspected the wine probe was part of separate, decade-long trade dispute between the countries over anti-dumping rules, particularly over Australia’s allegations of Chinese dumping of steel products.

Bilateral relations had shown improvement since the pandemic after Australia distanced itself from U.S. security concerns over popular Chinese apps TikTok and WeChat, Zhou said.

“I don’t think it’s part of the previous political fight between Australia and China” over the coronavirus, Zhou said. “There have been positive signs of political improvement of the bilateral relationship.”

Shares in Australian wine exporter Treasury Wine Estates plunged as much as 17% on the Australian stock market on Tuesday on news of the Chinese investigation.

The Melbourne-based company reported to the Australian Securities Exchange in 2018 that it was one of several Australian wine exporters experiencing delays in getting wine through Chinese customs.

The company said in a statement to the exchange on Tuesday that it will “cooperate with any requests that we receive for information from Chinese or Australian authorities.”

Birmingham said Australian wine was the most expensive on the Chinese market after New Zealand wine. He said he had been unable to speak to his Chinese counterpart about the mounting trade disputes since last year.

“Australia is certainly not engaging in any type of war,” he said.

Australia has had a free-trade deal with China, its biggest export market, since 2015. Australia is regarded by some as the Western country most susceptible to Chinese economic pressure because of their close economic ties.

Zhou said he had long doubted that China would target Australian wine in its diplomatic dispute with Australia because Chinese investors would be harmed.

“The Chinese investors are trying to secure a production base in Australia so that they can provide sufficient supply back to the Chinese market,” Zhou said.

“That means that if China’s government decides to impose anti-dumping duties against Australian wine, that will hurt the Chinese investors as well,” he said.

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