China doubles down on Australia trade dispute with new joint probe into wine subsidies and dumping claims

China’s Ministry of Commerce will initiate an investigation into wine subsidies after receiving a complaint from the Wine Industry Association of China

Two weeks ago, China announced an anti-dumping investigation looking at wines being sold in China at prices less than in Australia

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A countervailing investigation could result in duties imposed on Australian wine imports into China to offset alleged subsidies offered to Australian producers. Photo: AFP

Published: 10:47am, 31 Aug 2020Updated: 9:12am, 2 Sep 2020

China has further escalated its trade dispute with Australia by initiating a second investigation into Australian wines in a matter of weeks, this time focusing on subsidised products.

While it was announced separately, a countervailing investigation into subsidised Australian wine imports launched by the Chinese Ministry of Commerce on Monday is a joint investigation with the anti-dumping probe initiated on August 18, taking a similar format to the investigation into Australia’s barley dumping, industry sources said.

The barley investigation that started in 2018 and concluded in May resulted in an anti-dumping duty of 73.6 per cent and a countervailing duty of 6.9 per cent, meaning a total tariff of just over 80 per cent.

But a wine anti-dumping duty alone could far exceed the total duties imposed on barley, with the Chinese wine industry pitching for 202.7 per cent to cover losses due to the flooding of cheap Australian wine into the local market between 2015 and 2019, documents lodged with China’s commerce ministry said.

Similar to anti-dumping, the countervailing application by China Alcoholic Drinks Association said Australian products had grabbed a share of the Chinese wine market through price cutting.

Since 2015, Australian imports have increased in volume and decreased in price. It is very obvious

China’s Ministry of Commerce

“Since 2015, Australian imports have increased in volume and decreased in price. It is very obvious,” the application said.

China’s Ministry of Commerce said it would initiate an investigation into whether to levy countervailing duties against Australian wines alongside the anti-dumping investigation, anticipating to conclude the process within a year with a possible six-month extension.

As with the anti-dumping investigation, they will look at imported wines in containers of two litres or less having already conducted preliminary discussions with the Australian government, including consultations with Canberra on Thursday.