Tariff torture

Preliminary wine tariffs of up to more than 200 per cent imposed by China on Australian wine last week – heightening shelf prices by up to three times – have left local wine producers on edge.

The news of the preliminary tariffs on Australian wine of between 107.1pc to 212.1pc followed allegations that Australian wine had been dumped on the Chinese market, which the Australian Government and producers have vehemently denied.

Locally, the tariffs have led to an increased focus on export market development by wineries in response to the uncertainty.

Clare Valley Wine & Grape Association chairman Martin Ferguson AM said it was important for industry and government to work together to resolve the situation, and would support an appeal to the World Trade Organisation.

“This development comes at a bad time, following the pandemic and drought, and just when the weather is improving and the season is looking good,” he said.

Last week, Australia’s Minister for Agriculture David Littleproud expressed the Australian Government’s disappointment in the decision of Chinese authorities.

“The fact is, Australia produces amongst the least subsidised product in the world and provides the second lowest level of farm subsidies in the OECD,” he said.

“This decision is a seriously concerning development and one which Australia will be vigorously fighting against.

“The Australian Government categorically rejects any allegation that our wine producers are dumping product into China, and we continue to believe there is no basis or any evidence for these claims.

“We will continue to work with our wine industry and Chinese authorities as part of the ongoing dumping investigation, but we will of course consider all of our options moving forward.”

Taylors Wines managing director and Wine Australia marketing committee chair, Mitchell Taylor, said the Auburn-based winery had been exporting to China for more than 25 years, with the Chinese market accounting for 15 per cent of its exports.

“We currently have four containers that were heading to China that we’re going to now take off the boat in Singapore,” Mr Taylor said.

“We’ve got another two containers that were in the process of sampling so were half way through customs when they announced these measures last Friday, so we’re hoping they can get through.

“And we’ve got quite a bit of stock still in the market in China so we’re hoping that wine can still be sold through our importers.”

He expected the impact of the tariffs on Australian wine producers would be enormous.

“With a 212pc duty it will mean wines that are in the market place (in China) will basically be three times more expensive overnight,” Mr Taylor said.

“The current amount of wine we export to China is in the vicinity of $1.2 billion and our latest modelling from an industry perspective shows that will probably be reduced to about $100 million, so it will be about one twelfth of what it was.

“But it will hit the Clare Valley even harder because we make the top end premium wines that will now basically be far too expensive for the Chinese to consider, particularly when they notice the price has gone up three times the amount they’ve previously paid.”

Mr Taylor said he supported the Australian Government, but hoped a more “long-term and diplomatic” solution could be found to “turnaround this diabolical situation”.

“In the meantime, we need to re-pivot – you can’t just turn on other export markets overnight, they take many years of investment and effort, but we will need to re-pivot into other Asian markets like Japan, Korea and South East Asia,” he said.

“We’ll also need support through the excellent Made Our Way wine campaign to break into the big markets of the United State, Canada and also reinvigorate the United Kingdom market with the new free trade agreement we’re in the process of working through.”