Analysis and Commentary

Waiting for China, winemakers last cab off the rank

Analysis and Commentary

There is something particularly cruel for Australian manufacturing in China’s continuing targeting of wine exports as part of its – failed – attempt to force Australia to toe a more Beijing friendly policy line.

With China’s recent move to remove crippling trade sanctions on Australian barley holding up hopes for wine, nothing is sure and you can bet the Chinese will drag this silly pantomime out as long as possible.

After all China only lifted its attacks on the barley trade because of ‘changes in the market situation of barley in China’.

In other words the Chinese lifted the restrictions on barley because they need to import more of it, not because they were walking back on their tariffs which were a response to comments from the then Australian government.

Wine was the only really complex manufacture targeted, though some processed beef was included, when China took trade action against Australian products in March 2021.

Then China imposed a five-year tariff of up to 218 percent for Australian wine sold in quantities of less than two liters, claiming they were temporary anti-dumping measures to stop subsidised imports of Australian wine.

This was a preposterous claim, as Australian wine was being sold into international markets at a record $7.08 per litre in the year ending June 2020 according to the government’s Transparency Portal .

This was at or near the highest average price per bottle of our global competitors, and you could add to that the selling price for high end Australian wines such as Penfolds Grange at the time being between HK$2,000 (US$255) to HK$3,000 per bottle according to reports.

So while there isn’t a ‘need’ for our wine as there appears to be for barley, there is clearly a ‘want’ and an appreciation among Chinese consumers for the Australian drop.

China has since lifted most of the other restrictions but it is more than unfortunate that the big standout is the highest value manufactured product – wine.

The wine industry lost $1.5 billion in exports overnight when China imposed its tariffs, and while it has made up ground in new markets, sales have not recovered to pre tariff levels.

Prime Minister Anthony Albanese welcomed the lifting of barley’s 80 percent tariff as a very positive decision.

However he said: “I have said very clearly on China that we will co-operate where we can, we will disagree where we must, but we will engage in the national interest.”

So the bottom line is Australia is not backing down and China will lift restrictions on our wine imports only if it suits them.

To paraphrase an old Chinese saying, our manufacturers have no choice but to hide their strengths, and bide their time.

Picture: Treasury Wine Estates/Penfolds Magill winery, home of Grange Hermitage

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