Mitchell Taylor, the chief executive of Taylors Wines, one of the largest privately-owned wine groups in Australia, said on Friday the company was desperately trying to have four large containers of wine pulled off a ship currently docked in Singapore, which is on its way to China.
He said the move by Chinese authorities was ”awful news”. China represents about 15 per cent of Taylors total exports from its base in South Australia’s Clare Valley.
“It is outrageous,” Mr Taylor said.
“Unfortunately it didn’t surprise the industry. We’re mortified by this result and we’re mortified that it’s just come in so quickly.”
Australian Vintage, the second largest ASX-listed wine company with brands including McGuigan, Nepenthe and Tempus Two, slipped 1.6 per cent to 61.5c on Friday. It has been largely spared from the China trade fallout because its main business is centred on Australia and the United Kingdom.
Underlining the seriousness of the deteriorating relationship, new analysis from global bank Citi warned Australia could suffer a $76 billion hit to export income in a worst case scenario if China ramped up its trade sanctions to include iron ore. Australian exports to China totalled $150 billion in 2019-20.
In addition to wine, $1.1 billion of coal exports remains languishing on more than 80 ships off Chinese ports, with China claiming “quality issues”. Coal shipments, which are worth $14 billion annually, have been subject to an effective ban since October.
China’s Commerce Ministry ruled on Friday Australian wine had been dumped in China, causing “substantial” damage to local growers.
As punishment, winemakers would be hit with tariffs of between 107.1 per cent and 212.1 per cent from Saturday. The ministry said it was a preliminary ruling, with winemakers given 10 days to challenge.
Under the temporary measures, wine importers bringing in products under scrutiny will need to pay deposits to customs authorities and they will vary from company to company under a formula that will be different for each company under scrutiny.
Companies will only pay the deposit for four months, at which point it is meant to come off, until the anti-dumping investigation is finalised. The deposit will be refunded if Chinese authorities conclude ultimately wine was not dumped.
Chinese wine traders believe the impact of the tariff will be to halt sales of Australian made wines.
The decision comes 10 days after the Chinese embassy in Canberra distributed a list outlining 14 grievances over Australian policy towards China and said the trade disputes were linked to these issues.
China’s ambassador to Australia Cheng Jingye first explicitly linked trade retaliation to Australia’s call for an international inquiry into the coronavirus pandemic in an interview with The Australian Financial Review in April.
In a calculated snub, Australian officials only learnt of the tariff hit when it was published on the Commerce Ministry’s website there was no prior warning at the diplomatic level.
Senator Birmingham reiterated Australia would not buckle to the trade threats.
“The cumulative impact of China’s trade sanctions against a number of Australian industries during the course of this year does give rise to the perception these actions are being undertaken as a result or in response to some other factors,” Senator Birmingham said.
“This is a deliberate strategy and the approach in that regard is completely inconsistent with the type of undertakings that China has made. That’s of deep concern. The motivations really are ones for China.
“The Australian Government will always stand firm for our values, Australia’s sovereignty, and protect Australia’s interests at every juncture.”
Senator Birmingham vowed to help Australian winemakers fight the decision, including potentially referring it to the WTO.
However, he said the decision had effectively rendered unviable the sale of Australian wine, hurting producers who in good faith had opened up markets in China.
“This is a devastating blow to those businesses. It will render unviable for many businesses their wine trade with China,” he said.
“The findings of this preliminary investigation are erroneous in fact andin substance. Australia will stand by our wine industry, in defending their integrity, and in responding and appealing at every appropriate juncture to these findings.”
The minister warned China’s cumulative actions against Australian exporters was damaging its standing internationally.
“It will create a much riskier proposition for businesses and countries right around the world, as they look at the proposition and the potential that their trade, their businesses, could be disrupted through these sort of unwarranted, unsanctioned actions that frankly don’t stand up or fit within the type of rules based trading order that we support,” he said.
Agriculture Minister David Littleproud backed Senator Birmingham’s suggestion the hit on wine was politically motivated.
“In light of the recent comments by China, it gives the perception this decision is predicated on that rather than any wrongdoing by the wine industry,” he said.
Opposition trade spokeswoman Madeleine King urged the government to come up with a plan to support exporters hit by trade strikes.
“Despite ongoing and foreseeable bilateral tensions, Scott Morrison still has no plan to help Australian exporters or to make trade diversification a national priority,” she said.
Chinese officials launched the anti-dumping investigation in August after complaints from the local industry that Australian winemakers were being subsidised and dumping product in China.
The Morrison government rejected those claims, pointing to data that showed Australian wine was sold at a higher price in China than any other exporter.
Mr Taylor said Australian wine producers had filled in detailed questionnaires to help the Chinese investigation in good faith.
“We put a lot of effort into getting everything right and it’s just been slapped down with this decision,” Mr Taylor said.
The strike on wine came after Scott Morrison delivered a speech this week which was viewed in some quarters as an olive branch after he said Australia did not want to contain China, nor pick sides between China and the US.

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