Australia to send China to WTO over wine tariff dispute
Australia will refer Beijing to the World Trade Organization after China imposed tariffs of more than 200% on major exports.
Australia’s trade war with China has escalated with confirmation that the government will refer the country to the World Trade Organization (WTO) over “serious damage” to the wine industry after Beijing imposed huge tariffs on Australian cuts.
In a blow to China, Trade Minister Dan Tehan said one of the main reasons for the dispute was sent to the WTO was because Beijing refused to take phone calls from Australia.
“We would like to be able to sit down (with the Chinese government) and be able to resolve these differences,” Tehan said.
“Although we are not in a position to do so, we will use all other mechanisms to try to resolve this dispute and other disputes we have with the Chinese government.”
This is by no means Australia’s first referral to the World Trade Arbitrator.
Finance Minister Simon Birmingham referred Beijing to the WTO in December after adding tariffs on Australian barley entering China.
In 2020, China accused Australian wine producers of “dumping”, or lowering prices below the cost of manufacture in an attempt to increase market share in its economy.
He imposed an interim 175.6 percent tariff on Australian bottles, decimating what had been a lucrative market.
At the end of March, the Chinese Ministry of Commerce confirmed that it would impose “anti-dumping measures on certain imports of Australian wines for (another) five years”.
Winemakers said some tariffs were now up to 215 percent.
Australia’s wine exports to China have fallen from over $ 1 billion a year to just $ 20 million following the imposition of tariffs.
While Beijing has insisted the tariffs are legitimate, they are widely suspected of punitive measures to punish Australia which has called for an international investigation into the origins of Covid-19 and banned Chinese tech giant Huawei from work on sensitive infrastructures.
Australia “will defend the winegrowers”
“The measures taken by the Chinese government have caused serious damage to the Australian wine industry,” Mr. Tehan said today.
The government will continue to vigorously defend the interests of Australian wine growers by using the established WTO system to resolve our disputes.
“Australia’s recourse to the WTO in this case is consistent with its past use of the WTO and aligns with our support for the rules-based trading system. Australia remains open to engaging directly with China to resolve this issue. “
The Australian Grape and Wine trading organization welcomed the referral.
“We believe the decision of the Australian government to initiate this process is the right decision,” Managing Director Tony Battaglene said in a statement to the ABC.
“We have maintained our position that Australian producers have not sold wine into the Chinese market or received trade-distorting subsidies.”
Brands such as Treasury Estates’ Penfolds had been widely distributed in China.
China has imposed tariffs or disrupted the flow of a range of Australian products in recent months.
In November, lobsters were subject to increased import inspections at Chinese ports, resulting in the deterioration of many crustaceans and their loss of value.
This led to the lobsters that had been destined for China to become an unexpected treat on many Christmas dinner tables. But the industry was shaken after being denied the exceptional sales margin in China.
A referral to the WTO raises the stakes in the trade war between Australia and China, but it will not be resolved quickly.
The process can take several years to complete and while it is ongoing, tariffs are likely to stay in place.
Relations between Canberra and Beijing remain at their lowest.
In May, China declared would be “to suspend indefinitely” all activities within the framework of the strategic economic dialogue of the two nations.
Formed in 2014, it was the main bilateral economic forum between China and Australia. It had been used to encourage investment between the two countries and to facilitate trade and financial negotiations.
While the suspension of the dialogue did not have immediate effects – it had not met since September 2017 – it was seen as a new freeze in relations.