China has announced its decision to impose up to 218.4% tariffs on Australian wines for a period of five years, as it officially wraps up its eight-month anti-dumping investigation into Australian wine.
The decision completely dimmed Australian wine’s market prospect in its soon-to-be once biggest export market.
Announced on March 26 by Ministry of Commerce, the investigation concluded that there was a “causal relationship” between subsidized Australian wine and material damages to domestic wine industry.
Starting from March 28, any Australian wines in containers of 2 liters and below entering mainland China will be subject to duties from 116.2% to 218.4%, according to the ministry.
The punitive tariffs will be in place for at least five years until 2025, the same time frame China imposed on Australian barley.
Australian Trade Minister Dan Tehan refuted and called the tariffs “unjustifiable and made it impossible for Australian wine be competitive in China.
“This decision which has been taken by the Chinese government is extremely disappointing and completely unjustifiable,” Tehan told reporters in Melbourne on Saturday.
He revealed that Australia might contest the decision on wine with World Trade Organization.
In the detailed investigation published by the Chinese ministry, it singled out Wine Australia’s AU$50 million export package as the source for government backed subsidy, of which AU$32 million was allocated to promote Australian exports in China and the US.
The finalized tariffs was higher than previously announced premilitary anti-dumping tariff of up to 212.1%. It however said anti-subsidy tariff between 6.3% and 6.4% will be waivered to avoid double taxation.
Bulk wine for now are exempted from the tariffs.
Australia exported AU$1.15 billion worth of wines to China last year, its biggest wine export market, but last year’s preliminary tariffs in November and December virtually halted its export.
The country’s wine exports to China in December almost plunged to zero.
Share price of Australia’s biggest wine exporter to China, Treasury Wine Estates, parent company of Penfolds and Wolf Blass, dropped on Friday on news of the tariffs. The Australian wine giant is subject to 175.6% of duties, still lower than most of smaller Australian wine companies who are slapped with 218.4%.
The tensions between the two countries are still running high after rounds of retaliatory tariffs on both countries’ products.
Before China slapped the punitive tariffs, Australian wine took up about 40% of market share in the country, ahead of France and Chile.