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China-Australia trade dispute spreads to wine following beef and barley measures

China’s Ministry of Commerce has opened an anti-dumping inquiry into Australian wine, after tariffs on barley were introduced earlier this year amid simmering trade tensions.

China has opened a new front in its trade dispute with Australia by launching an investigation into accusations of dumping by Australian wine producers that could be a precursor to punitive tariffs.

China’s Ministry of Commerce announced today that it had commenced an anti-dumping investigation on wine imported from Australia in containers of 2 litres or less. The investigation will take up to a year, but the ministry said it could be extended to February 18, 2022 under special circumstances.

Earlier this year, the Chinese government imposed tariffs of up to 80 percent on Australian barley following a similar 18-month anti-dumping investigation. It also blacklisted several major Australian beef export facilities over alleged labelling inconsistencies.

These claims were disputed by exporters and the Australian government, but the punitive measures remain in place.

Adding wine exports to the list would be a significant blow to Australia’s wine industry, which counts China as its biggest export market by some distance.

The industry’s statutory body, Wine Australia, reported that exports to mainland China stood at A$1.1 billion ($795 million; €668 million) for the year to the end of June 2020, an increase of 0.7 percent on the year before. Australia’s second-biggest wine market is the US, with exports valued at A$430 million.

The volume of wine exported to China decreased by 17 percent between FY 2019 and FY 2020 to 121 million litres. However, the average value of a litre increased because of a greater focus on high-value premium wines over those at the cheaper end of the market.

This was despite the coronavirus emerging just before Chinese New Year – typically the biggest sales period of the year for Australian wine in China.

Private equity firms have made significant investment in Australian wine companies in recent years, including the recent acquisition of McWilliam’s Wines by newly formed Prcstnt Asset Management, which took McWilliams out of administration.

The Carlyle Group acquired Accolade Wines for A$1 billion in 2018. A source close to Carlyle told Agri Investor in May that the firm maintained a positive long-term outlook for the growth of the Accolade business in China, notwithstanding covid-19 and wider uncertainty over the two countries’ trading relationship.

Australian Grape & Wine, the national association of winegrape and wine producers, said in a statement: “We believe that the Australian grape and wine sector is well placed to respond to this investigation and AGW and our exporting companies will cooperate fully.

“China is an important market for Australian wine and our wine is in demand from Chinese consumers. Australia has a large number of exporters with close cultural ties to China.

“The Australian industry welcomes the opportunity to build on these ties and work with the Chinese industry and government to further technical cooperation and develop lasting relationships.”