Fears China has cut off imports of Australian wine amid worsening trade war

16 November 2020 –

There are signs that Australia’s billion-dollar wine trade with China has effectively ground to a halt, as winemakers continue to grapple with disruptions.

Industry group Australian Grape and Wine says it has asked exporters if any shipments had cleared China’s customs since an unofficial ban was touted two weeks ago, but so far none have reported success.

“We know there’s been no official confirmation of a ban,” chief executive Tony Battaglene said.

“But we have heard that shipments have been subject to increased testing, they are subject to increased scrutiny of documents and it’s definitely slowing any clearance of customs.

“So we actually haven’t heard of any shipments that have yet been cleared through the customs.

“We still don’t know if every shipment has been held up or whether it’s just some shipments having extra scrutiny, so we’re still in the position of not knowing a lot of facts.”

Over the same period, Mr Battaglene estimated more than half of all wine exports to China had not left Australian shores due to growing uncertainty in the industry.

“We think there’s probably been a reduction in exporters sending product of 50-60 per cent so we think there’s been quite a few that have received either information from importers suggesting don’t ship or else orders have been suspended until things are more suitable,” he said.

“We’re talking about a significant disruption particularly at a time that is our maximum export time leading up to Chinese New Year.”

Mr Battaglene said winemakers had experienced similar delays at China’s ports in 2018, and hoped there would be a similar result for exporters affected by the latest round of delays.

“We’re hoping that’s a good example of what might happen that things are held up the extra customs clearance might take time It might take a week or two, but things will get through,” he said.

It comes as the industry prepares for the possibility that tariffs could be placed on Australian wine sold to China, as part of an investigation into claims Australian winemakers sold wine below the cost of production and received government subsidies.

“I think people are hoping it won’t happen and they’re looking at other markets very, very keenly,” Mr Battaglene said.

Trade Minister Simon Birmingham said the Government was anxious for the wine industry regarding the prospect of tariffs.

“We are prepared, we don’t want to expect, we hope that China will follow the evidence, the evidence is clear that there’s no justification for putting those sorts of tariffs on Australia’s wine industry,” Senator Birmingham said.

“We don’t subsidise our product, we don’t dump our product and if they follow the evidence, they’ll find there’s no justification for these sorts of tariffs.

“But given the regulatory issues we’ve faced through a number of sectors this year, we are prepared, we’re anxious for our wine industry and we are working closely with them to make sure they mount the strongest possible defence.”

Earlier this month, Treasury Wine Estates chairman Paul Rayner told the company’s AGM it was preparing for severe tariffs to be placed on Australian wine by China.

There were more than 2,400 exporters that sold wine to China from Australia last year, in a trade worth $1.26 billion.

Questions raised over mega trade deal

The latest trade tensions come as Australian politicians continue to urge their Chinese counterparts to pick up the phone to resolve the burgeoning list of trade disputes.

At the weekend, Australia and China both signed the Regional Comprehensive Economic Partnership (RCEP), designed to encourage trade and investment across the Indo-Pacific.

Australia already has free trade agreements with all the countries in the bloc, including China. Still, the Government hopes the new deal will still help trade flow by creating more uniform trading rules and has suggested it could create a circuit breaker in the increasingly acrimonious relationship with Beijing.

But unions are continuing to criticise the RCEP, warning it will cement unfair rules which make it easier for employees to bring in temporary workers.

And they argue the fact that China has targeted Australian exports, despite the existence of the Australia-China free trade agreement, shows the limits of free trade deals.

“We only have to look at what’s happening at the moment with China and our trade arrangements there to see that just having an agreement in place does not support local industry or jobs,” Australian Council of Trade Unions president Michele O’Neil said.

Labor has also responded cautiously to the RCEP, vowing to scrutinise the agreement carefully.

“The Government must explain what real benefits this agreement delivers — if any — for Australia’s coal, timber, seafood and agriculture exporters whose products have been blocked by China in recent weeks,” Shadow Trade Minister Madeleine King said.

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