Prime Minister Scott Morrison has declared Australia will never trade away its sovereignty in the face of Beijing’s latest trade-related salvo, this time targeting the valuable wine sector.
The claims allege Australian winemakers are deliberately selling wine into the country at below-the-market prices, at times even below production cost, effectively “dumping” the product into China to drown out local winemakers.
The investigation will also examine whether wine production is being subsidised by the government, which in certain cases, can allow exporters to easily undercut competitors.
The investigation could lead to more tariffs being implemented on Australian exports to China.
Prime Minister Morrison has dismissed the allegations telling reporters on Aug. 19, “We totally don’t accept any suggestion that there has been any dumping of Australian wine in China whatsoever.”
“There is no basis against the claims made against the Australian wine industry or subsidies or things of that nature,” he added.
“We will never trade away our sovereignty in Australia on any issue,” Morrison said. “We will be consistent, clear, and respectful and we will get on with the business.”
Morrison also made the point that Australian wines had the second-highest average price in China in the first half of 2020, following New Zealand wines.
“Australia’s wine producers have worked hard for years to establish themselves with a reputation for the highest of quality and for being internationally competitive based on their excellence,” he said.
Birmingham said the government would defend against the claims and work towards preventing potential tariffs or duties being imposed on the sector.
China is currently Australia’s largest wine export market, accounting for 37 percent of exports valued at over $1 billion (US $792 million) annually.
The wine investigation is the latest Beijing-instigated action targeting key economic trading relationships between China and Australia.
He emphasised that the government would follow all formal processes around the investigation.
While cabinet members have avoided directly criticising the Chinese regime or any allusion to a “trade war” between Beijing and Canberra, backbenchers and independent members of Parliament have not been as coy.
Queensland Senator Matt Canavan said Beijing was “bullying the rest of the world” and called for Australia to “stand up to this and call it out for what it is,” reported AAP.
“Every Australian business must be very wary and careful about how they interact with a country that is proving itself not to be trusted,” he added.
Rabobank warned however that Australia’s exposure to China may have reached its peak and cautioned against concentrating too heavily on the market.