Australian Grape and Wine announces Treasury Wine Estates, Casella Family Wines, Australian Swan Limited to be investigated by Chinese Ministry of Commerce (MOFCOM) for anti-dumping (AD) and the same three companies plus Pernod Ricard Winemakers for countervailing duties (CVD) investigations.
On the recommendation of the China Alcoholic Drinks Association (CADA), MOFCOM initiated AD and CVD investigations into Australian wine exports on 18 August and 31 August respectively.
MOFCOM claims Australia is selling wine into China at lower prices than its value in Australia crowding out local producers. MOFCOM also announced it would investigate whether it would levy countervailing duties against Australian wine pointing at the A$50 million Export and Regional Wine Support Package which has been extended to 2021 after it was scheduled to finish this year. The investigation could therefore result in hefty duties to offset the alleged subsidies.
It follows similar probes initiated by China into Australian barley and beef exports, barley of which attracted AD duty of 73.6 per cent and a CVD of 6.9 per cent and a total tariff of over 80 per cent. The Australian wine tariff could be much greater with the CADA pitching for an eye-watering and crippling tariff of 202.7 per cent.
The Australian government and the Australian wine industry strongly refute these claims and believe the investigation is politically motivated but acknowledges the investigation and is doing all it can to work with the Chinese authorities to come to an agreeable solution.
The Chinese export market is the biggest for Australia, with China buying just over a third of our total exports. A tariff such as this one proposed would have devastating effects for the Australian wine industry.
The good news is Australian wine continues to be in high demand from Chinese consumers. Last week Credit Suisse upgraded Treasury Wine Estates shares to an outperform rating and don’t believe the Penfolds brand image in China will be any way impacted by the recent allegations. The bank suggested there would be a backlog of demand for Australian wines given COVID-19 and postponed events and celebrations.
AGW has today reported to members on the latest update. Here is where we stand.
On the recommendation of Australian Grape and Wine (AGW) 31 Australian companies registered to complete a questionnaire that was issued by the MOFCOM on the 15 September and due on the 25 September, the results of which would further determine a sample size of companies, MOFCOM would further investigate. On 28 September MOFCOM announced it would investigate Treasury Wine Estates, Casella Family Wines and Australian Swan Vintage based on export volume. The three businesses have seven days to comment on the sampling results.
Countervailing duties investigation
The CVD investigation was initiated on 31 August, and the same 31 Australian wine exporters registered to be investigated. They were issued with a sampling questionnaire on 23 September from which MOFCOM would select a sample size to investigate. The response was due on 28 September. On Wednesday 30 September MOFCOM announced four companies for investigation. They are Treasury Wine Estates, Casella Family Wines, Australian Swan Vintage and Pernod Ricard Winemakers. The parties have seven days from the announcement to comment on the sampling results.
The AGW understands that the companies named will soon receive the full AD and/or CVD questionnaires. MOFCOM expect a response within 30 to 37 days.
AGW stated it expected the questionnaires to be lengthier requiring a more detailed response than the first round and would continue to support and work with the named companies to assist their response efforts.
A spokesperson for AGW said; “We are working through the process and working hard to support companies with lodging submissions to show we are doing the right thing.”