China's five year tariffs 'not OK' - says Prime Minister

Prime Minister Scott Morrison has labelled the ruling by China’s Ministry of Commerce (MOFCOM) to impose ‘anti-dumping’ tariffs of between 116.2 per cent and 218.4 per cent on imported Australian wine for the next five years as “not OK”.

In a statement released on Friday, MOFCOM announced the new measures would commence on Sunday and remain in place for five years. The final tariffs comes as MOFCOM’s makes its final determinations on investigations into the dumping of Australian wines in China and trade distorting subsidies (countervailing duties). Duties will be imposed on imports of all bottled, still wines from Australia.

Trade Minister Dan Tehan told reporters in Melbourne on Saturday: "This decision which has been taken by the Chinese government is extremely disappointing and completely unjustifiable. We will be looking at next steps, and those next steps will include looking at taking this matter to the World Trade Organisation."

China’s Global Times reported: “As deteriorating political relations are weighing not only wine but also barley and timber, analysts also warned that Canberra should take more concrete steps to improve ties before it is too late.”

Australian Grape & Wine Chief Executive, Tony Battaglene said that the outcome is not unexpected. He said:

“Our focus now is two-fold. Firstly, we’re working with industry and the Australian Government to assess options available to us within the Chinese system, and internationally. And secondly, we’re focusing on growing demand for Australian wine in other markets across Asia, Europe, US, and the UK.

“The Australian Government’s $72.7 million investment to help agribusinesses expand their export markets is a great first step to getting on with the job of finding new markets for Australian wine. It’s going to take collaboration, hard work and commitment, but if we work together we’re confident that we can drive growth in market access and sales in a range of markets in the coming years.”

For Treasury Wine Estates who had been selling close to $500 million annually to China, a combined anti-dumping and couterveiling duty rate of 175.6 per cent will be applied to TWE’s Australian country of origin wine.

TWE issued a statement on Monday, saying: “TWE is executing a detailed response plan to maintain the long-term strength of its business model and brands, with benefits expected to reach their full potential over a two to three year period.”

This includes importation of wines from America (the Penfold’s Californian Collection), to create a Chinese ‘Penfold’s’ wine using grapes produced in China and building business globally in luxury and masstige markets.