Winemakers fear trade tensions with China

May 13, 2020
By Alana House

There are fears wine exports will be the next battleground as trade tensions escalate between Australia and China.

Australia’s decision to push for an international investigation into the origin of COVID-19 has created diplomatic issues with China.

China’s ambassador Cheng Jingye said that Chinese tourists and students may rethink their plans to visit Australia in the future “if the mood is going from bad to worse”, while saying consumers may also decide against buying Australian wine and beef.

Chief executive of Australian Grape and Wine, Tony Battaglene, said he is concerned by the trade tensions.

He admitted: “We are absolutely worried, and would like to see a quick resolution to these issues.”

Four Australian abattoirs had their permits to ship products to China suspended on Monday due to alleged breaches of China’s labelling and health certificate requirements.

The abattoirs are responsible for about one-fifth of Australia’s beef exports to China. China is Australia’s biggest market for beef by volume, accounting for nearly a third of total beef exports.

China is also threatening to impose a massive tariff on Australian barley. The yet-to-be-finalised tariffs may include a dumping margin of up to 73.6% and a subsidy margin of up to 6.9% for barley imported from Australia.

It’s worrying news for Australian wine exports to China, which surged 18% last year to a record $1.2billion, overtaking French wine exports to China for the first time.

Lake Breeze winery

South Australia’s Lake Breeze winery general manager Roger Follett told The Australian he is concerned by the trade tensions.

“Hopefully all this is just posturing by China because if it’s not a lot of people are really going to struggle,” he said.

“It’s not just the volume of wine that’s sold into China, the best thing for us is that they are buying the higher-end stuff.”

“If it does turn into a trade war we might end up with the same situation after the GFC, when Australian exports were then heavily skewed towards America, and suddenly because that market dried up the local market here was flooded with cheap stuff.

“Given all the pressure facing the industry anyway, this is absolutely the last thing we need.”

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