Australian wine faces duties of up 218.5 per cent as China says subsidies caused ‘substantial damage’ to domestic industry

China’s Ministry of Commerce says there is a ‘causal relationship’ between subsidies and ‘substantial damage’ to domestic wine industry

Major wine companies will face specific countervailing duties ranging from 6.3 to 6.4 per cent

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Chinese Ministry of Commerce said on Thursday that it would impose countervailing or anti-subsidy duties ranging from 6.3 to 6.4 per cent on Australian wine exporters. Photo: EPA-EFE

Published: 11:47am, 10 Dec 2020Updated: 5:14am, 7 Sep 2021

Australian wine now faces total temporary duties of up to 218.5 per cent after the Chinese Ministry of Commerce imposed temporary countervailing duties on Australian wine on top of provisional anti-dumping duties announced two weeks ago.

On Thursday, the ministry said it would impose countervailing or anti-subsidy duties ranging from 6.3 to 6.4 per cent on Australian wine exporters, saying that subsidised Australian wines have hurt China’s domestic wine industry.

“There is a causal relationship between the subsidies and the substantial damage to the local industry,” the ministry said.

In August, the commerce ministry initiated a paired anti-dumping and countervailing investigation into Australian wine at the request of the China Alcoholic Drinks Association, on behalf of the domestic industry.

The anti-dumping investigation determines whether Australian wine exporters have sold wine in China at prices cheaper than those in the domestic Australian market, while the countervailing investigation looks at how exporters managed to grab a share of the Chinese wine market through price cutting enabled by subsidies offered by the Australian government.

Major wine companies such as the owner of Penfolds label, Treasury Wine Estates, and Casella Wines, known for another well-known label in China and Asia, Yellow Tail along with 22 other named winemakers will face specific countervailing duties of 6.3 per cent, while others not named will face a tax of 6.4 per cent.

The taxes will be collected as deposits until the final countervailing investigation is completed by August next year, although it could be concluded earlier. Under World Trade Organization rules, these duties can be held for as long as nine months.