China Wine Tariffs ‘Extremely Disappointing’: Treasury Wine CEO

Bottles of Australian wine are seen at a store selling imported wine in Beijing, China, on Nov. 27, 2020. (Florence Lo/Reuters)

Australia’s largest wine exporters have reacted with dismay after Beijing’s Ministry of Commerce (MOFCOM) slapped massive 100 to 200 percent tariffs on imports from the weekend.

A list from MOFCOM reveals Australia’s largest wine producer Treasury Wine Estates (makers of Penfolds, Rawson’s Retreat, and Jacob’s Creek) was hit with one of the highest tariffs at 169.3 percent.

Importers of Casella Wines, Accolade Wines, Pernod-Ricard, Zilzie, Australian Vintage, and Brown Brothers etc. have also been laden with a 160.6 percent tariff.

Australian wine companies not highlighted or singled out, will be slugged with a broad-ranging 212.1 percent tariff.

Treasury Wines Estate (TWE) CEO Tim Ford said, “We are extremely disappointed to find our business, our partners’ businesses and the Australian wine industry in this position.”

“The strength of our brands, including Penfolds, combined with our diversified business model will allow TWE to implement a range of changes and plans that will enable us to manage through the significant impact of these measures going forward ...” he said in a statement.

“However, there is no doubt this will have a significant impact on many across the industry, costing jobs and hurting regional communities and economies which are the lifeblood of the wine sector,” he added.

Swan Winegroup attracted the lowest tariff at 107.1 percent. Swan also happens to be a “well connected“ wine group with distribution links in 150 Chinese cities throughout China, according to the Australian Financial Review.

It also created a special label with the image of former Australian ambassador to China, Geoff Raby.

Raby has been a vocal critic of the Australian government’s handling of its relationship with the Chinese Communist Party (CCP) in recent months, saying the prime minister’s calls for an inquiry into the origins of COVID-19 were “ill-judged.”

Last week, MOFCOM announced it had made “preliminary rulings” regarding an ongoing investigation into “anti-dumping” allegations against Australian wine sellers into China.

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• China Slaps 200 Percent Tariffs on Australian Wine Exports

MOFCOM claimed it found “substantial” dumping of wine from Australian wine companies and that there was a “direct relationship” between the dumping and actual damage in the Chinese wine market.

Australian Agriculture Minister David Littleproud responded swiftly, saying, “We’re trying to get an appreciation of the reasoning behind the determination in introducing these tariffs.”

“That’s why we’re moving quickly to work with the industry and my officials and DFAT officials in Beijing to get an understanding so we can put our case around this decision … that we feel is quite outrageous and, to be honest, disproportionate to any reason that anyone has put to us subsequently,” he told the ABC.

The wine industry has reacted with dismay at the tariffs, with Australian Grape and Wine CEO Tony Battaglene standing firm by Australian exporters saying they did not engage in dumping-related conduct.

“While we are disappointed with this development, our members will continue to cooperate with MOFCOM as the investigation continues, working towards an outcome that is consistent with the facts of the case, and supports the growth of the wine industry in Australia and China,” he said in a statement.

Greg Bondar, managing director of wine consultancy Alternative Palate, said the claims of dumping lacked “substance and specific details.”

He also referred to allegations of damage to China’s local wine industry as “baseless.”

“The $1.3 billion a year in exports of Australian wine to China will result in higher prices for Chinese consumers and force Australian winemakers to seek more opportune markets,” he told The Epoch Times.

“Tariffs can have unintended side effects making the Chinese domestic industries less efficient and innovative by reducing competition. They also hurt domestic consumers, since a lack of competition tends to push up prices,” he added. “Importers will pass the costs of tariffs on to customers.”