CHINA Aussie wine facing its worst fears in China market November 2020
The Australia-China political tension has spread to the wine industry, with wine producers in Australia facing disruptions to export their products to China, one of its largest export market.
Recent report said that none of the exporters managed to clear their shipments at China’s customs, although there has been no confirmation of a ban on Australian wine. Australia wine exporters reported that their shipments face vigorous testing and intense check on documents.
Due to this growing uncertainty, many of Australian wines are stuck at the port of origin, with many receiving instructions from their importers in China to halt the shipments or wait for further instructions.
The disruption to trade happens during the peak year-end season when demand is at its peak as China celebrates year-end festivities including Chinese New Year in early 2021.
At present, wine exporters are expecting that China might impose further tariffs on its products. China earlier claimed that Australia dumped many of its wine products at cheap prices into China market, however Australia rejected this claim as baseless.
Australia has more than 2,400 wine exporters that sell wine to China with a combined trade value exceeding US$1 billion. Australia’s major wine producer, Treasury Wine Estates, the maker of Penfolds and Wolf Blass, has much at stake as 45% of its profit came from Asia business of which China made up the lion share. Nevertheless, analysts feel that Treasury will not be badly impacted if there were tariffs imposed by China, as its wines are higher priced wines whereas the tariffs are mainly targeted towards lower-priced wine.
China has targeted Australian exports, despite the existence of the Australia-China free trade agreement. Already, COVID-19 pandemic has affected global sales of wine producers, and the new trade tension adds further strains to their business.

Latest development:
China has just imposed high tariffs of between 107% to 212% for Australian wine imports in late November. This measure is temporary pending further investigations. According to the Chinese Ministry of Commerce, its first investigation has proven that Australian wine was being dumped into its market causing significant damage to the domestic wine industry. Earlier on, Australian wine benefited from zero tariffs under the China-Australia free trade agreement. Australia seeks to overturn the move and might bring its existing trade dispute with China to WTO.



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