China opens investigation into certain wine imports from Australia

The Chinese Ministry of Commerce announced on Tuesday that it was opening an anti-dumping investigation into certain wines imported from Australia.

Australian Federal Trade Minister Simon Birmingham said in a statement that Chinese authorities “have also informed Australia that they are considering a request to initiate a countervailing duty investigation.”

“This is a very disappointing and confusing development,” Birmingham said, adding that “Australian wine is not sold below market prices and exports are not subsidized.”

The announcement comes amid growing geopolitical tensions between the two countries. China is Australia’s top export market and by far the largest destination for island wine exports by value, according to the government’s industry authority, Wine Australia.

The Chinese survey targets “wines in containers of 2 liters or less”, according to an English translation on the website of the Ministry of Commerce.

A typical bottle of wine weighs around 0.75 liters.

The anti-dumping investigation follows a request in early July from the China Alcoholic Beverages Association, China’s Commerce Ministry said in a separate online statement on Tuesday. The investigation will examine potential dumping in 2019 and damage to the industry for the years 2015 to 2019, the release said.

The investigation will last for a year – until August 18, 2021 – with the possibility of being extended until February 18, 2022, in special circumstances, according to the ministry.

Australia held the largest share of the Chinese imported wine market at 37%, according to 12-month-to-May data from Global Trade Atlas and cited by Wine Australia in an Aug. 4 report.

France was second with 27%, followed by Chile with 13%, according to the report.

Trading in shares of Australia’s largest winery, Treasury Wine Estates, was briefly halted pending an announcement, according to a statement on the Australian Stock Exchange website. The shares fell more than 13% in trading on Tuesday.

Treasury Wine Estates later said in a statement issued by the Australian Stock Exchange that the company would cooperate with all inquiries from Chinese or Australian authorities. The company added that it would remain focused on developing its high-end and luxury brands, and generally strive to increase its contribution to China.

It was not immediately clear whether Treasury Wine Estates was part of the Chinese investigation.

Australia exported 62% of its wine produced in the 12 months to the end of June, according to the Wine Australia report.

Mainland China was by far the largest market by value, with exports up 0.7% to A $ 1.1 billion ($ 790 million), the report said, noting the growth in exports at prices higher and a drop in the bottom of the market.

Wine Australia referred a CNBC request for comment to the Australian Grape and Wine National Industry Association.

The organization said in a statement: “We believe the Australian grape and wine industry is well positioned to respond to this investigation and that Australian Grape & Wine and our exporting companies will cooperate fully.”

“Australian industry welcomes the opportunity to build on these ties and work with Chinese industry and government to deepen technical cooperation and develop lasting relationships,” the association said.

– CNBC Will koulouris contributed to this report.