World Leaders Rally Behind Australian Wine

Politicians from multiple nations, including the U.S., urge consumers to buy Aussie after China imposes crippling tariffs

World Leaders Rally Behind Australian Wine
What's Mandarin for sticker shock? Bottles of Penfolds like these in a store in Nantong, China, are now almost 170 percent more expensive, thanks to tariffs. (Getty Images/VCG)
Dec 7, 2020

When your significant other breaks things off, it really helps if your friends are there to pick you up. Australian winemakers experienced some welcome solidarity last week after China, Australia's largest trading partner, imposed tariffs of up to 212 percent on Aussie wine exports.

Political leaders from the United States, United Kingdom, European Union, Japan, Sweden, Germany, Italy and New Zealand launched a global campaign via video to encourage their compatriots to drink Aussie wine in response to what is widely believed to be political bullying on the part of China.

The Inter-Parliamentary Alliance on China (IPAC) is a global bipartisan group of legislators founded as a forum to discuss how democratic countries can respond to an increasingly assertive China. It represents more than 200 elected officials from 18 countries and the European Union, including 10 members of the U.S. Congress from both sides of the aisle, including Senators Bob Menendez (D-N.J.), Marco Rubio (R-Fla.) and Mark Warner (D-Va.).

According to Australian Labor Party Senator Kimberley Kitching, who is the Australian co-chair of IPAC, the idea came from discussions between IPAC members. "We thought the video (subtitled in English and Chinese) would be a good way to show the power of values-based engagement," she told Wine Spectator. "Our incredibly energetic secretariat mobilized IPAC members immediately to send over their cameos lending support to the Australian wine industry. After all, friends help each other out in times of need."

In the video, Kitching explains that the Chinese government handed the Australian government a list of 14 grievances demanding that Australia stop speaking out in defense of human rights and rules-based order. "China has canceled a whole range of Australian imports in an attempt to bully us into abandoning our values. One of the worst affected is the Australian wine industry. This isn't just an attack on Australia. It's an attack on free countries everywhere."

U.S. Rep. Ted Yoho, a Republican from Florida, makes a video appearance, enjoying a glass of Australian wine and saying, "Our friends need our help."

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Separate from IPAC, the U.S. National Security Council tweeted that Australian wine would be featured at a White House holiday reception this week. The American ambassador to Australia condemned China's trade aggression.

The Australian wine industry will need all the help it can get. According to Wine Australia, 62 percent of Australian wine is exported. The export market was valued at AU$3 billion in September, before tariffs were imposed, and China is the top destination for wine by value and the No. 3 destination by volume. It accounts for 42 percent of Australian wine exports by value. The United States is a distant second.

Australian Trade Minister Simon Birmingham stated that the tariffs will make the Chinese wine market unviable for Australian producers. Tony Battaglene, CEO of Australian Grape and Wine Inc., the national trade association of grape and wine producers, said, "There's a state of shock out there with no easy solution."

Relations between Australia and China soured in April after Australia called for an international inquiry into the origins of the coronavirus. The conflict escalated after China announced investigations alleging Australia was dumping cheap wine into the Chinese market to undercut Chinese wines and that the Australian government was subsidizing wine exports, allegations that the Australian government and wine industry vehemently deny. Australian producers have been focusing on the premium end of the Chinese market, so wineries find the allegation of dumping cheap wine confusing at best.

The investigations are ongoing, but two weeks ago, the Chinese imposed temporary anti-dumping tariffs on wines, ranging from 107.1 percent to 212.1 percent, based on the winery. Casella, maker of Yellow Tail, faces 160.2 percent tariffs. Treasury Wine Estates (TWE), maker of Penfolds, received 169.3 percent duties.

China has been a big part of TWE's resurgence, and the company temporarily suspended trading of its shares on learning the tariff news. They have since resumed trading and announced they would be reallocating Penfolds Bin and Icon range wines from China to other markets elsewhere in Asia as well as to the U.S. and Europe.

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