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Treasury Wine Estates Limited (ASX:TWE) has requested the exchanges for a trading halt today over the provisional anti-dumping measures imposed by China on Australian wine imports. The Company is currently reviewing the details of the provisional anti-dumping measures.
Image Source: © Kalkine Group 2020
The move by the Chinese Ministry of Commerce is likely to escalate the trade and diplomatic tensions between Beijing and Canberra as the domestic winemakers are now facing a tariff threat of up to 200 per cent as Chinese trade officials have claimed that Australian producers had been dumping products.
The Chinese Ministry of Commerce Announces Tariff Up to 200 per cent
At present, importers bringing in investigated products would need to pay to the Chinese customs authority, and the charge currently varies on different rates the Chinese authority has assigned for different companies.
The notice published by the Chinese authority suggests that the tariffs could vary from 107.1 per cent to 212.1 per cent.
Shares of Australia’s biggest winemaker – Treasury Wine reacted sharply post the announcement as the rate imposed on TWE remained the highest among all the named wine firms at 169.3 per cent.
Image Source: Company’s Annual Report
TWE plunged drastically on the exchange with shares witnessing an intraday fall of ~ 13 per cent before the shares were put on a trading halt.
The Chinese Ministry of Commerce did not mention any timeline for the provisional measures, leaving the market clueless.
In August 2020, China began an anti-dumping probe over imports of Australian wine on the request from the Chinese Alcoholic Drinks Association. The association recently called for retrospective tariffs on Australian wine imports.
Image Source: Shutterstock
Moreover, China’s wine industry had complained that the imported wines from Australia reap the benefit of government subsidies, which allow them to gain an advantage over the local products in China.
Expressing his disappointment over the Chinese Ministry of Commerce’s announcement, Agriculture Minister David Littleproud cited that the Australian farm products are already one of the least subsidised products across the globe and that the government would fight against the decision.
Image Source: Shutterstock
Further, Mr Littleproud mentioned that the government categorically rejects any such allegations over wine producers dumping product in China and would continue to believe that there is no basis of such allegations.
China is one of the top markets for the Australian wine with exports to China hitting a record value of $1.3 billion last year. Furthermore, China is also the largest trading partner with two-way trade of ~ $235 billion.
