The worrying precedent in China's dispute with Australia

China slams tariffs on Australian wine as trade tensions worsen

Beijing will impose anti-dumping duties on Australian wine imports starting Saturday as diplomatic and trade disputes between countries deepen.

China’s Commerce Department said Friday it would impose anti-dumping tariffs of between 107 and 212 percent on Australian wine – a warning from manufacturers will decimate A $ 1.2 billion ($ 884 million) annual trade in its largest overseas market.

The measures are the latest in a wave of sanctions, as 82 ships carrying Australian coal are stranded off the coast of China, according to a person with direct knowledge of the situation.

Barley, beef and seafood have already been targeted by the Chinese authorities. Last week, 14 complaints against Canberra were listed, allegedly explaining the deterioration in bilateral relations.

The tariffs on wine follow a preliminary investigation by Chinese authorities after local winemakers complained that Australian producers flooded the local market with cheap wine between 2015 and 2019. Australian exports rose from 5.7 million liters to 12.1 million liters per year in the reporting period.

$ 800 million

Value of Australian coal in ships stranded off the coast of China

Simon Birmingham, Australia’s trade minister, said Beijing’s investigation was “factually and substantively wrong” and had created a perception that China had targeted the country on political issues.

Mr. Birmingham added that the decision “is totally incompatible with the commitments made by China through the China-Australia Free Trade Agreement and the World Trade Organization. It is not compatible with a rules-based trading system. ”

Canberra previously warned that it could appeal to the WTO.

Tony Battaglene, executive director of Australia Grape & Wine, an industry group, said the tariffs threatened to close the Chinese market to Australian producers.

“We cannot see any evidence in the filing of this investigation to suggest we have a case to answer and if there is no technical justification it must be something else,” he replied when asked if he was Believed the sanctions to be right Politically motivated.

China is Australia’s largest trading partner with two-way trade valued at A $ 252 billion last year. In the past two years, however, relations have deteriorated as Canberra cracked down on Beijing’s more aggressive foreign policy under Xi Jinping, the Chinese president.

In a memo leaked to Australian media by a Chinese diplomat last week, Canberra’s ban on Huawei’s involvement in building the country’s 5G network and “disinformation” about China’s handling of coronavirus was cited as one of the reasons for the deterioration Relationships listed.

Scott Morrison, Australia’s Prime Minister, this week praised China for lifting its citizens “out of poverty” in statements that have been interpreted as an attempt to improve relations.

China’s trade sanctions against Australia had mainly focused on agricultural products, a politically sensitive sector for Mr Morrison’s Conservative government due to the lobbying power of farmers. However, analysts warn that the risks for bulk goods, especially coal, are increasing.

Ships containing approximately A $ 800 million worth of Australian coal have been prevented from docking due to concerns about China’s “environmental standards”. Australia’s monthly coal exports to China fell to 390,000 tonnes in November, compared with an average of 7.9 million tonnes between January and August.

The end of Australian coal imports is making life difficult for Chinese steelmakers and other end users. They face supply bottlenecks and rising prices domestically and in Mongolia, the fastest alternative source of coal, according to S&P Global Platts in a research note.

Citi has forecast a 10 percent decline in Australian exports to China over the next 12 months. In the worst-case scenario, restrictions would be extended to Australian iron ore, reducing total exports by 50 percent. In this scenario, Australia would suffer a 3.8 percent decline in nominal GDP.

“Our modeling suggests that the Australian dollar, export earnings, income and growth will undeniably be affected in a worst-case scenario that includes restrictions on iron ore,” Citi said in a report.

However, most analysts believe that China is unlikely to target Australian iron ore as there are few alternative sources in the short term.