Just two weeks after announcing a shocking anti-dumping probe into Australian wine, China has announced a second investigation today, targeting Australian wine subsidies, escalating tensions between the two trade partners.
The Ministry of Commerce posted a statement on its website this morning announcing it’s launching an anti-subsidy investigation into Australian wine exports in 2 litres or less. The investigation like the anti-dumping probe will last for at least a year, and could be extended to February 28, 2022 if needed under special circumstances, it says.
The second investigation came less than two weeks after China launched an anti-dumping probe in Australian wines, which now account for nearly 40% of market share in China, mainly thanks to the two countries’ Free Trade Agreement and active market promotions.
According to state news Xinhua, the investigation was proposed by China Alcoholic Drinks Association, the same organisation behind anti-dumping probe, and will look into a total of 40 subsidies from the Australian government that benefited Australian wine industries and companies.
The first probe already caused panic among wineries and merchants, as it could lead to over 200% tariffs on Australian wine exports. Australia currently enjoys zero duty, after four years of gradual reduction after signing the FTA in 2015.
If things continue to escalate between the two countries, the two investigations could virtually end Australia’s AU$1.1 billion wine exports to its most valuable export market in China.
Relations between the two countries are at historic low. China earlier slapped punitive tariffs on Australian barley, sanctioned beef exports and protested Australia joining America for independent inquiry into Coronavirus.
Australia in 2019 surpassed France to become China’s biggest wine supplier, at 38% market share, ahead of France and Chile.
Its wine exports to China in the past 12 months till June this year amounted to AU$1.1 billion, which is almost three times of its second biggest export US by value (AU$430 million).