Australian winemakers have been dealt a huge blow from China as tensions continue to spiral between the two countries.
Chinese regulators announced Friday that they would impose heavy tariffs on Australian wines after finding preliminary evidence of dumping. Starting Saturday, China will begin slapping duties of between 107.1% and 212.1% on Australian wine imports, the Ministry of Commerce said in a statement.
The move places yet another hurdle in front of Australian businesses as relations worsen between Canberra and Beijing.
China announced an investigation into some Australian wine imports in August, following a complaint from the China Wine Industry Association. Chinese regulators at the time said that they would investigate 40 allegations of unfair government subsidies in the Australian wine sector.
The Commerce Ministry now says it has confirmed cases of dumping, “causing material damage” to the domestic wine industry in China.
China is by far the biggest importer of Australian wine, according to Wine Australia, a trade organization backed by the country’s government. In the most recent financial year, which ended this September, mainland China alone made up 39% of Australia’s total wine exports by value, the group said.
“This is a devastating blow to those businesses who trade with China in the wine industry,” Australian Trade Minister Simon Birmingham said at a press conference on Friday. “We think it’s unjustified, and without evidence to back it up.”
Australia has upset China this year by calling for an investigation into the origins of the coronavirus pandemic. Beijing later targeted Canberra over trade, namely by suspending some imports of beef and slapping heavy tariffs on barley.
In August, Australia effectively blocked the sale of a dairy business to a Chinese company when an official said the acquisition “would be contrary to the national interest.” That business, Lion Dairy, is now being sold to Australian firm Bega Cheese instead, in a deal worth 560 million Australian dollars ($413 million), the companies announced this week.
The wine tariffs come just days after Australia and China both signed onto a major trade deal called the Regional Comprehensive Economic Partnership (RCEP). Some analysts had suggested that the agreement could help the two countries rebuild ties.
Birmingham said that Australia would challenge the tariffs, including by potentially raising the issue with the World Trade Organization.
“The cumulative impact of China’s trade sanctions against a number of Australian industries during the course of this year does give rise to the perception these actions are being undertaken as a result or in response to some other factors,” he told reporters.
The Chinese government has defended its approach. In its statement Friday, the Commerce Ministry emphasized that its investigations were conducted “in strict accordance with relevant Chinese laws and regulations and WTO rules.”
China recently acknowledged the frayed relationship — but made clear where it thinks the finger should be pointed. Last week, a Chinese Foreign Ministry spokesperson said that Australia should shoulder the blame for the “sharp downturn” in relations between the two countries.
“The responsibility for causing this situation doesn’t lie with China at all,” spokesperson Zhao Lijian said at a news briefing.
“[They] have subsequently taken a series of wrong moves related to China, which is at the root cause of China-Australia relations taking a sharp downturn and stuck in the current difficult situation.”
— Shanshan Wang contributed to this report.