Australian companies are trying to adapt to the new reality, but the coronavirus is not the only problem. Another serious issue also affected their plans. Importantly, Australian winemakers have received another blow from China as tensions continue to rise between the countries. On Friday, Chinese regulators made an important announcement.
According to this announcement, they would start imposing heavy duties on Australian wines after finding preliminary evidence of dumping.
It is worth noting that, starting from November 28, China will begin temporarily slapping duties from 107.1% to 212.1% on Australian wine imports. The information came from the country’s Ministry of Commerce. This decision represents another obstacle for Australian businesses as relations worsen between Australia and China.
People should take into account that China announced an anti-subsidy investigation of some Australian wine imports in August, following a complaint from the China Wine Industry Association.
As a reminder, regulators made the decision to investigate 40 allegations of unfair government subsidies in the Australian wine sector. Based on the information provided by the Ministry of Commerce, it confirmed cases of dumping. As a result, the domestic wine industry suffered serious losses.
It is no secret that the effects of the new measures could be devastating for the Australian winemakers. Importantly, China is by far the biggest importer of Australian wine. For example, in the most recent financial year, which ended this September, mainland China alone accounted for 39% of Australia’s wine exports by value. This fact once more underlines the importance of China to winemakers from Australia.
Winemakers and risk factors
This year, Australia has upset China by calling for an investigation into the origins of the coronavirus pandemic. This is not the end of the story. China later targeted Australia over trade, namely by suspending some imports of beef and slapping heavy tariffs on barley.
Interestingly, in August, Australia effectively blocked the sale of a dairy business to a Chinese company. That business is now being sold to Australian firm Bega Cheese. As a result, Bega Cheese will become the owner of Lion Dairy in a deal worth 560 million Australian dollars ($413 million).
As a reminder, last week Australia and China both signed onto a major trade deal called the Regional Comprehensive Economic Partnership (RCEP). Some people suggested that the agreement could help the two countries rebuild ties. However, as can be seen from China’s decision, the country is not willing to change its position. It won’t be easy for Australian winemakers to cope with the situation.