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Chinese tariffs on Australian wine will essentially “close the market,” says the exec trade group

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Beijing’s decision last week to impose tariffs of up to 212% on Australian wine imports threatened business with mainland China, according to Tony Bataglene, chief executive of Australian grapes and wine, a national association.

Battaglene is working with about 800 wine producers in Australia who have “built their business” on exports to China and are now left without a backup plan, he added.

“We were surprised, we were shocked,” Bataglene told CNN Business. “Given the scope of these intermediate tariffs, I mean essentially that they will close the market for Australian bottled wine, for premium wine in China. There is no way we can compete at these levels.”

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The Chinese Ministry of Commerce announced on Friday that its decision was made after finding preliminary evidence of dumping. Australian authorities bitterly protested the move, saying China was unable to provide evidence.
The war is being waged against the backdrop of a wider deterioration in relations. Australia has upset China this year by calling for an investigation into the origins of the coronavirus pandemic. Beijing later turned to Canberra for trade, suspending some beef imports and imposing heavy tariffs on barley.
China has hit tariffs of up to 212% on Australian wine imports

Wine tariffs, which took effect on Saturday, forced businesses to quarrel. Following the announcement, some container ships traveling to mainland China had to return to Australia, according to Battaglene.

“Orders are canceled, orders are stopped,” he said. “Nobody wants … to take additional import duties just to go through customs. In essence, the market will be closed to us.”

On Monday, the leading Australian winemaker, Treasure wine properties (TSRYF) (TWE), announced an emergency plan. He said he would begin redirecting shipments from China to other markets, such as the United States, Europe and other Asian countries, once he learned that his products would be hit at 169.3 percent.

According to Vice President Tim Ford, some of the wine that TWE is considering for redistribution has already arrived in a port in Shanghai. “We will re-evaluate [what to do with] this product, “he said Monday when he called an analyst.

“We are extremely disappointed to find our business, our partners’ business and the Australian wine industry in this place,” Ford added. “Our focus is very clear on building our business outside of China in the next period of time.”

The plan was not enough to reassure investors. Shares of TWE closed 6.9% in Sydney on Monday, after falling 11.3% on Friday when tariffs were announced.

How the
China is Australia’s largest importer of wine, according to Wine Australia, a trade organization backed by the country’s government. In the last fiscal year that ended this September, mainland China alone accounted for 39% of Australia’s total wine exports by value, the group said.
From now on, more “Australian winemakers will now be forced to consider alternative markets for export sales,” said a statement from Australian grapes and wine.

On Monday, Ford called on the Australian government to help businesses find a solution.

“Left unresolved, there will be a significant impact,” he said. “Things can change and we will deal with them as they change, but we have some kind of deal with the cards we know at the moment, without a strategy of hope, if you will. Because the strategy of hope is not a very smart strategy. “


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