China-Australia relations: wine is heading to Taiwan and other ‘non-traditional markets’, but Canberra says exports still way down

Value of Australian wine shipments to new destinations is far from matching the A$1 billion (US$748 million) worth of lost annual exports to China
Canberra hopes formal complaint with World Trade Organization will force conversation with Beijing about anti-dumping tariffs, but a resolution could take years

China-Australia relations

Su-Lin Tan

Published: 4:30am, 22 Jun 2021

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Australia’s wine exports to new markets are increasing but nonetheless remain a drop in the ocean compared with the former output to the now-closed Chinese market. And to that end, Canberra is hoping to force a conversation with Beijing about its anti-dumping tariffs on Australian wine, having formally lodged a complaint with the World Trade Organization (WTO) on Friday.

On Monday, Australian trade minister Dan Tehan said that sales of Australian wine in “non-traditional markets” rose during the first quarter of the year. Exports to the Netherlands, for instance, were up 63 per cent to A$20 million (US$15.1 million) from January to March, while those to South Korea increased 133.6 per cent to A$13.6 million.

Another winery in Tasmania found new markets in Taiwan and sent its first shipment in February, while the establishment of the new Australia-United Kingdom Free Trade Agreement – signed last week – should open up more access to wine exporters, Tehan added.

“The Taiwan event has been very good for us,” Moorilla Winery chief winemaker Conor van der Reest said, referring to a virtual wine-tasting in April facilitated by Austrade, the marketing arm of the Australian trade department. “We have sent our first order, another one is in the order stage, and another party is seeking samples.”

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But the increase in value of Australian wine shipments to these new markets still has a long way to go before it can match the previous A$1 billion (US$748 million) worth of annual wine sales to China that have been whittled down to about A$20 million since China unofficially restricted such exports last year and imposed anti-dumping duties on Australian wine amid a tense bilateral conflict.

While their relationship had been slowly deteriorating over the past five years, tensions were ratcheted up a notch in April 2020 when Canberra called for an independent investigation into the origin of the coronavirus without consulting Beijing. Various countries now support an independent investigation even though many had demurred on the idea of an independent investigation last year, instead opting to focus on bringing the pandemic under control.

“Australia’s world-leading winemakers are adapting to challenging trading conditions, and it’s [a] positive that our winemakers are diversifying their customer base,” Tehan said on Monday, two days after he announced that Australia had lodged a complaint and commenced a dispute-settlement process with China at the WTO.

This follows another recent complaint over China’s imposition of anti-dumping duties on Australian barley. That investigation will now go before a newly set up WTO dispute-settlement panel after informal discussions between the nations fell through earlier this year.

Tehan said the use of the WTO’s dispute-resolution process was a standard process, but added that Canberra remained “open to engaging directly with China to resolve this issue”.

On Sunday, Australian foreign minister Marise Payne hoped the WTO complaint – in spite of a weakened WTO dispute-settlement process – would open the door to a bilateral discussion with China after previous failed attempts by Canberra to initiate a ministerial-level dialogue with Beijing.

“Certainly, we believe that the World Trade Organization needs a number of key reforms … but what lodging the dispute enables us to do is to begin dispute-settlement consultations. That actually is a bilateral discussion with China about the issues,” Payne said on an Australian Broadcasting Corporation programme.

“We’ve seen duties of over 200 per cent applied to Australian wine. We don’t believe that is consistent with China’s obligations under the WTO. So, that part of the process enables us to have that direct conversation.”

Tehan also said Australia “stands ready to sit down with the Chinese government to work out this current dispute”.

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“The Australian government continues to want a very constructive engagement when it comes to dealing with China,” he said on Saturday. “We would love to be able to sit down and be able to resolve these disputes. But, while we’re not in that position to do so, we will use every other mechanism to try [to] resolve this dispute and other disputes that we have with the Chinese government.”

He also said the anti-dumping duties imposed by China – ranging between 116.2 per cent and 218.4 per cent – had caused serious harm to the Australian wine industry. The 80.5 per cent duties on Australian barley also rendered the grain uncompetitive in the Chinese market.

However, Tehan cautioned that the WTO settlement process could take a long time – possibly two to four years – and he reiterated his openness to conversing directly with Beijing in the interim.

“But if we can’t, we’re prepared to go through the process, even though it will take the length of time to be able to resolve this,” he said.