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ABC News
ABC News
Business
political reporter Stephanie Borys 

Australian wine growers warn hefty tariffs imposed by China on reds, whites put industry at risk of oversupply as picking season approaches

Australia's wine industry has warned grapes will be left on the vines this year due to the ongoing trade dispute with China.

Before tariffs were imposed on Australian wines, China was the largest export market for the sector, with sales passing $1.2 billion a year.

Many wine grape growers expected demand to continue to rise and planned accordingly.

However, the lucrative market all but dried up overnight after China imposed hefty tariffs on Australian reds and whites in 2020.

Wine Australia director and managing director of Taylors Wines Mitchell Taylor said hard decisions would need to be made when picking started next month.

"Unfortunately, I think a lot of growers will have to leave grapes on the vine this vintage," he said.

"We've got great oversupply hitting the industry because it takes a lot of time to plan these markets and then to make the wines, particularly red wines, which the Chinese love."

The former Morrison government lodged a formal complaint with the World Trade Organisation (WTO) about the tariffs imposed on wine and barley and the case is under consideration, with a final report due this year.

As those cases continue, Trade Minister Don Farrell has reiterated his willingness to travel to China for talks.

"I've consistently said since assuming the role of Trade Minister, our preferred pathway to resolve these trade blockages is through dialogue and discussion, rather than disputation," he told the ABC.

"I look forward to discussing this with my colleagues in China as soon as practicable."

The ABC has been told the minister is open to a virtual meeting before travelling to Beijing as early as next month, although no official date has been set.

His comments follow Foreign Minister Penny Wong's visit to China in December.

Mr Taylor said a meeting between the trade minister and his counterpart could not come soon enough, given vintage was set to start next month.

"The more we can get an early indication about how these talks eventuate, the better off it will be for the long-term prospects of some of the investments that we have," he said.

"I think it's very important to get the respect and the relationships in order."

In mid-2022, ome Australian exporters hoped China's tariffs on wine, cotton, coal and red meat could be dropped.

Other industries also hoping for an answer

Wine is just one of a handful of exports that have been hurt by trade sanctions.

China was the largest purchaser of Australian barley until it introduced tariffs in 2020.

Andrew Weidemann from Grain Producers Australia said the decision was a "kick in the guts" for farmers.

"We've lost quite a considerable amount of money year on year, somewhere in the order of $600 million to $700 million a year since the start of this particular tariff," he said.

He was also supportive of the minister heading to China for meetings.

"We need to have that relationship-building exercise by our people, and [there is] nothing better than having it face to face," he said.

"And rebuilding and opening the dialogue between the two countries is the only way that we'll ever resolve what's currently in place."

In a sign China might be prepared to reconsider trade sanctions, China's ambassador to Australia Xiao Qian last week declared he wanted the two countries to talk, instead of allowing the matter to proceed through the WTO.

"If [the] Australian side is ready to forget about the multi-lateral solution and come back to a bilateral solution I think it is a good idea as well," he said at the Chinese embassy in Canberra last Tuesday.

If China opened its doors again to Australian wine and barley, the cases before the WTO could then be dropped, which Mitchell Taylor said would be ideal.

"The best outcome would be for us to come to an arrangement where we don't need to go to the WTO," he said.

"Because I think both Australia and China realise that this is a long, drawn-out process."

Another sector caught up in the trade stoush, but not being examined by the WTO, is lobsters.

There have been promising signs of China reconsidering the situation, after China's top diplomat in Perth visited Australia's largest exporter of rock lobsters last week.

A statement from the Consulate in Perth outlined how the Consul General in Perth, Long Dingbin, toured Geraldton Fishermen's Co-operative.

"Consul General Long […] affirmed that the company attaches great importance to the Chinese market, saying that the Chinese economy has resilience, vitality and potential, and the Chinese market provides great opportunities for the world," the statement said.

"It is hoped that the company will strengthen its confidence in cooperation, pay attention to industry trends, and make good use of platforms such as the China International Import Expo."

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