Fears some Australian small wine producers could go bust as China imposes steep tariffs

There are fears that more than 1000 smaller Australian wine producers won’t survive devastating new tariffs imposed by China.

Australian wine makers are grappling with steep new tariffs of up to 212 per cent which came into effect on Saturday after an announcement by China.

The industry previously benefited from zero tariffs under the China-Australia free trade agreement.

Australian Grape and Wine chief executive Tony Battaglene says smaller wine producers that rely solely on China for their business are at risk of closing.

“They may well go out of business and as I say we’ve got probably 1400 exporters like that, in Australia,” Mr Battaglene told SBS News.

China is the biggest destination for Australian wine.

Every year Australia exports $1.2 billion of wine to China, accounting for over a third of the total value of Australian wine exports.

China’s tariffs will vary depending on each producer, ranging from 107 to 212 per cent.

Companies that participated in China’s investigations into alleged dumping by Australian producers will pay lower duties of between 160-170 per cent.

Mr Battaglene said the industry was in shock.

“It’s going to have a major impact,” he said.

“It will make us very uncompetitive with the major other exporters in China. Essentially, it could close that market to many particularly small exporters.”

He said there was “no way” that China’s allegations that Australia was dumping cheap wine to hurt the Chinese industry were substantiated.

“I’m currently reading through the 80-page interim decision, it’s got holes all through it,” he said.

“I just don’t think there’s any technical reason or rationale that you could possibly accuse the Australian industry of dumping wine on China.

“If anything, we would be selling at a higher price.”

Some Australian wine producers have been diversifying their markets, in anticipation of China’s move.

With 10 per cent of his business at risk, Hunter Valley wine producer Bruce Tyrrell read the tea leaves when China launched its investigation earlier this year, branching out to other Asian markets.

“There really was no choice, it was quite apparent to me that we were going to be blocked in some shape or form into China and that our sales there would be reduced,” he said.

“I don’t think in the short term there will be a market. Australia’s become uncompetitive in the market and we’re going to put our efforts in other places.”

Mr Tyrrell said with levies of up to 212 per cent on his business he would be priced out of the market.

“They’re just not being fair dinkum. And that’s all we ever asked in a trading partner,” he said of China.