Topics: The imposition of tariffs on Australian wine traded into China




Simon Birmingham:     Thank you very much for coming along today. Can I start just by acknowledging that there are some uncontrolled fires burning north of Adelaide, these are in the regions that are close to where the Pinery Flat Bushfires occurred a couple of years back, I want to send every thought and best wish to the communities, households, others, who are facing very challenging times there. And all of our thanks to the various first responders, volunteers and others who are dealing with those difficult situations. Earlier today, the Australian Government learned, via a notice on the Chinese Ministry of Commerce website, of the application of preliminary duties and tariffs against Australian wine of up to 212 per cent. These are very significant impositions on Australian wine. They will have the effect of rendering largely unmarketable, unviable the Chinese wine industry, or the Chinese wine market for Australian producers.


This is a very distressing time for many hundreds of Australian wine producers who have built, in good faith, a sound market in China. It is of great concern that China has taken this action, and it’s an action that comes on top of an accumulation of other actions during the course of this year in particular. Australia defends to the hilt our winemakers, their integrity, and the commercial market based proposition and environment in which they operate. The idea that Australia somehow subsidises our wine industry for it to be able to dump or sell its product below cost on international markets is a falsehood. It is wrong, and the findings of this preliminary investigation are erroneous in fact and in substance. Australia will stand by our wine industry, in defending their integrity, and in responding and appealing at every appropriate juncture to these findings. These are preliminary findings. They are subject to a 10-day window of review. We’ll work with the industry and businesses affected to exercise all avenues in that 10-day window. There are also preliminary findings in relation to the broader analysis of the anti-dumping claims that China is claiming to investigate. We’ll continue to work with our industry for them to provide substantial responses, that details all the evidence about the commercial practices of how Australia’s wine industry operates, for the duration of this investigation. As in other matters, we continue to reserve all of our rights, including recourse through the World Trade Organization.


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. The doing so is completely incompatible with the commitments that China has given through the China-Australia Free Trade Agreement and through the World Trade Organization. It’s incompatible with a rules-based trading system. Where issues of trade ought to be facilitated according to those common standards. This perception that’s being created, has been created as a result of decisions undertaken by various Chinese authorities, and of market uncertainty created for exporters from Australia operating into China.


I want to make it clear to Australian businesses who engage with China that we know you do so in good faith. That you have built genuine markets, genuine market propositions, and you have done so out of an intent to create a beneficial commercial environment that has benefited not only Australian businesses, but also their Chinese customers, and the opening up of trade and commerce between our two nations has created benefit right across both communities. We stand with you, the businesses who engage with China, and in particular those businesses who may have been started by Australians of Chinese origin, working and leveraging from small beginnings, the creation of a beneficial trading relationship. It is unfortunate that these sort of risks have come about in your commercial relationship. Now, there’s always risks that exist in a trading relationship. But the result of the cumulative actions by China in relation to Australian trade this year, doesn’t just heighten the risk as it relates to Australian businesses trading with China, 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.


So, in closing, my message today very much is to the Australian wine industry, that we recognise your hard work, we have high regard for the quality produce that you produce. We know that you send some of the highest priced wines to China, rather than wines that are dumped there. We know that you have built that market, as you have many others right around the world, in good faith over the years. We understand you’re distressed at this time and we will work with you to seek to fight these unfair decisions at every juncture.


Question:         The 212 per cent number, that would mean [indistinct] itself on a bottle of wine, by the sounds of it.


Simon Birmingham:     This is a devastating blow to those businesses who trade with China in the wine industry. It will render unviable for many businesses their wine trade with China. And clearly, we think it’s unjustified, and without evidence to back it up.


Question:         Can you perhaps, just clarify the effect of the tariffs? Does that bring the tariff up to the retail price of a bottle, or even worse off than that?


Simon Birmingham:     So, under the China-Australia wine- under the China-Australia Free Trade Agreement, we have seen tariffs for Australian wine going into China eliminated. That has helped to fuel significant growth in that market, as it has for many other products, as it has indeed in many other countries we have secured FTAs with. Now the result of these tariff decisions will mean that product passing through customs on entry into China will face these tariffs of up to some 212 per cent. That will add enormously to the cost of that product. It is a tax on Chinese consumers, essentially, but of course by taxing the product at such enormous impactful levels, it will likely see consumers turn away from it, and that is what then has the devastating impact on Australian producers. That’s why we think it is grossly, grossly unfair, unwarranted, unjustified.


Question:         So basically, it cuts that $1.2 billion market for the time being. It’s basically put a guillotine down on it.


Simon Birmingham:     It will in relation to product that arrives in containers less than two litres, so essentially all bottles is the definition that’s targeted.


Question:         Is there any now leverage to refer this activity to the World Trade Organization?


Simon Birmingham:     Ultimately, there will be. And we certainly continue to raise our concerns about the number and cumulative effect of China’s trade sanctions against Australia via the WTO. There is a process to run in relation to this particular decision. And we would not yet be at a stage where we could seek to have this particular decision reversed or overturned through the WTO. We have to run through more of the Chinese’s domestic processes first and foremost. But we will exercise and use every avenue available to defend the integrity of our wine industry.


Question:         Do you know what is happening with the apparently hundreds of shipping containers held at China ports in the past weeks? Do you know what their fate is?


Simon Birmingham:     So, product that not yet cleared Customs will, we understand from tomorrow, be subject to these tariffs.


Question:         Is there a case to be made to provide any support to the winemakers affected?


Simon Birmingham:     Look, we’ll work closely with the wine industry. I’ve spoken already to the Chief Executive of the Australian Grape and Wine Association and we’ll continue to engage with them, particularly as they, as many Australian industries have sought to do, look to diversity their markets to pursue other avenues in other countries. We have not just, as a Government, secured a Free Trade Agreement with China over the last 7 years. We’ve secured Free Trade Agreements, opening up improved market access with Japan, Korea, Canada, Mexico, Vietnam, Indonesia and many other nations where we’ve improved the opportunity for Australian businesses to get into those markets, and we will work very closely with this industry as we are with others that seek to help them to grow in those markets. And of course, our ambition is to see similar Free Trade Agreements open up further access into the European Union and the United Kingdom as soon as possible as well.


Question:         Is this a punitive action given the diplomatic tensions between the two countries?


Simon Birmingham:     As I said, it is entirely understandable why people would draw the conclusion and why perceptions will exist, but as a result of the accumulation of trade sanctions levied by China against Australia, this is a deliberate strategy. And that the approach in that regard is completely inconsistent with the type of undertakings that China has made. That is of deep concern. The motivations really are ones for China. But I can understand well and truly why people would draw the conclusions and how the perception has been created that this is a deliberate strategy, piling on pressure in a number of different sectors, it would seem. And that’s of deep concern. It’s of deep concern to many Australian businesses and their operations. But of course, the Australian Government will always stand firm for our values, Australia’s sovereignty, and protect Australia’s interests at every juncture.


Thanks, guys.