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Fears China will impose 200% wine tax

August 26, 2020
By Alana House

There are fears China could impose a wine tax of up to 200% on Australian imports during its anti-dumping investigation.

The China Alcoholic Drinks Association making a formal application on behalf of the domestic wine industry in early July.

The association, which represents 122 members, said the growing number of low-priced Australian wines sold in China had “severely disrupted and inflicted a serious negative impact on the local market”. It called for an anti-dumping margin of 202.7%.

It has asked the regulator to look into 10 Australian wine producers including Treasury Wine Estates, the maker of Penfolds; Casella; Accolade, Australian Vintage, Yalumba, South Australian Wine Group, The Wine Company, Truffle & Wine, Wingara Wine Group and Stoney.

“If we get export duties of around 200%, it would simply close that market to us,” Australian Grape and Wine head Tony Battaglene told The Adelaide Advertiser.

Battaglene said Australia had a strong case against the claims it was dumping wine on the Chinese market, but a steep wine tax would make the market “unviable”.

He said in a briefing note prepared for the industry that the “worst case scenario” would involve China imposing interim tariffs on Australian wine as early as late October.

Otherwise, there would be no impact until after the inquiry concludes in August 2021 or February 2022 if it is extended for a further six months.

Mitchell Taylor

Mitchell Taylor (above), managing director of Taylor’s Wines, said the value of bottled wine going into China had been increasing.

“If you look at the latest export figures, they really indicate the reverse is happening. We’re selling more into China at the high end, and the volumes are dropping,’’ he said.

“$1.2 billion in sales to China is by far our biggest market, followed by the US and UK.

“We export to over 100 countries around the globe and we’re always exploring opportunities everywhere, but the main issue if we lost a major market like China is where would that wine be sold?’’

Australia is the number one imported wine category in mainland China and has performed better than its key competitors in the last year.

Import data from the Global Trade Atlas shows that Australia held a 37% share of the value of wine imported by mainland China in the 12 months ended May 2020, well ahead of France on 27%, Chile with 13% and Italy with 6%. While Australian exports increased, French imports fell by 36%, Chile by 26% and Italy by 12%.

The China Australia Free Trade Agreement came into effect in 2015, and wine tax was eliminated on January 1, 2019.

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