KOMPAS.com – An alliance of lawmakers in various countries is calling for a drink wine Australia as an attempt to counter the Government’s “authoritarian intimidation” China.
The alliance called the Inter-Parliamentary Alliance on China (IPAC) in a call released Tuesday (12/1/2020) asking its citizens not to drink their nationally produced wine during December to support the Australian wine industry.
IPAC consists of around 200 members of parliament from 19 countries and calls its organization a group of cross-party legislators from democratic countries who are trying to make steps against China.
Miriam Lexmann, a member of the European Parliament from Slovakia, invited colleagues to “oppose authoritarian oppression being carried out Xi Jinping“.
Politicians Swedish Elisabet Lann later added that drinking a bottle or two of Australian wine is a way of telling “the Chinese Communist Party we can’t be tricked.”
Australian wine products have been among the hardest hit industries amid deteriorating bilateral relations between China and Australia.
Last week, Beijing imposed very heavy import tariffs, ranging from 107 to 200 percent, on all Australian wines.
The move followed preliminary findings of an ‘anti-dumping’ investigation by China, which accused Australian wine producers of selling products at below production costs, causing “huge losses” to Chinese wine producers.
The Australian Government has repeatedly denied these allegations.
The increase in import tariffs for wine came after China’s Ministry of Commerce instructed importers to suspend orders for wine and six other Australian export products early last month.
In the video appeal, Senator Kimberley Kitching of the Australian Labor Party said China’s actions were an attempt to “bully” Australia into “abandoning its values”.
“This is not just an attack on Australia. This is an attack on other free countries,” said Senator Kitching.
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A blow to Australia
The Australian wine industry generated revenue of 7 billion Australian dollars or around Rp70 trillion in the last fiscal year.
Wine industry observer Matthew Reeves explained to ABC the rate hike was a blow as 36.7 percent of Australian wine was exported to China.
He estimates that demand for Australian wine in China will drop with import tariffs of up to 200 percent.
The Chinese side’s “anti-dumping” investigation is still ongoing, but the country’s Ministry of Commerce has announced that from November 28, Australian wine importers in China will be required to pay an “anti-dumping bond”.
The deposit, which is effectively the same as the import tariff, will range from 107 percent to over 200 percent, depending on the particular wine product.
The anti-dumping security deposit will be charged to Chinese importers who order wine in bottles of 2 liters or less.
One of the Treasury’s largest wine exporters Wine Estates, the move was affected as soon as the Chinese Government announcement was released. The value of the company’s shares fell 11 percent.
Meanwhile Tony Battaglene from Grape and Wine Australia said the tariff would be very difficult for wine exporters.
Trade Minister Simon Birmingham said the tariffs dealt a “devastating blow” to the wine industry.
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Exports were reduced by 80 percent
According to Tony Battaglene, currently hundreds of containers of Australian wine shipping have piled up in various ports in China since the unofficial ban took effect early last month.
Information obtained by the ABC states that wines held at the port will be subject to a new rate.
“Very few products enter. We have decreased exports by 80 to 90 percent,” said Tony.
“I have never had a year like this. This is the biggest challenge we have faced in a market that is so important to us,” said Tony.
Agriculture Minister David Littleproud said the Australian Government was in contact with Chinese authorities.
“We are trying to get an explanation regarding the reasons behind the tariff setting,” he said.
Australia’s biggest wine company, Treasury Wine Estates, said its exports to China were already subject to a tariff of 169.3 percent, and would take emergency steps to minimize losses.
Treasury Wine Estates estimates that the demand for their wine products in China will be very limited from now on.
Treasury Wine Estate is a wine producer with famous brands such as Penfolds, Wolf Blass, Lindeman’s and many others. It is said that 30 percent of the company’s revenue came from the Chinese market last year.
“We are extremely disappointed to find our business, our partner’s business and the Australian wine industry in this position,” said the company’s CEO, Tim Ford.
“We call for strong leadership from the government to find a way forward,” he said.
According to Matthew Reeves, Australian wine producers will try to shift supply to other markets, but the large amount of product that needs to be diverted will drive a significant drop in wine prices.
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The Chinese market loves red wine
Wine has become a status symbol of China’s growing middle class in recent years, and the country is fast becoming Australia’s largest wine export market.
Kym Anderson, director of the Wine Economics Research Center, explained that 90 imported wines in China are red wine.
But overall, red wine and white wine only account for 4 to 5 percent of alcohol consumption there.
He said that the consumption of alcoholic beverages in China is still dominated by rice wine and traditional beer.
Chinese wine industry consultant Lu Jiang to ABC explained that local people do not always like to drink wine.
“The Chinese wine industry has a low starting point, there is no tradition of drinking wine, most people consume liquor made in China,” he said.
However, as the country’s middle class has grown, the wine industry has also grown in recent years.
According to Lu Jiang, China’s wine industry is undergoing a “forced transformation” to compete with imported wines from Europe and Australia with “a better balance between price and quality”.
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