The international trade umpire has appointed panellists to adjudicate Australia's battle with China over wine export tariffs.
China was a lucrative market for the Australian bottled wine industry.
In 2020, $898 million worth of Australian wine was sent to China, making it the largest destination by value.
But in March last year, China decided to impose damaging anti-dumping tariffs on Australian wine of between 116.2 per cent and 218.4 per cent.
The tariffs applied to wine sold in containers of 2 litres or less and will remain in place for five years.
Australian Grape and Wine chief executive Tony Battaglene said now only $20 million worth of wine was making its way to China.
"Bulk wine export is still technically possible to go into China, but we're seeing all sorts of border delays at the moment, so essentially the market is closed to us," he said.
Progress is being made
The Australian government initiated the World Trade Organization (WTO) dispute last year and Mr Battaglene welcomed the appointment of the panel.
"It always takes a fair bit of time to get a panel appointed because both Australia and China needed to agree on the membership," he said.
"What was pleasing is that both countries agreed, and we didn't have to get the WTO to step in and appoint their own people."
The panel is made up of three independent experts from around the world.
Mr Battaglene says he is confident Australia will get a fair hearing.
"They've got considerable experience in the WTO and they're genuinely independent so our hope is that they will look at the evidence and adjudicate it in the correct manner," he said.
"I'm very confident that we will come out winners."
Mr Battaglene said it could be at least another 12 months before there was a resolution.
"Australia will put in a submission and our Department of Foreign Affairs and Trade has been preparing that submission while the panel is being appointed.
"Then China will be given the opportunity to provide a rebuttal to that submission and then there'll be a meeting in Geneva in about June this year, for a first hearing."
Trade Minister Dan Tehan said Australia remains open to further discussions with China to resolve this issue.
"The Australian government is committed to defending the interests of Australian winemakers and will continue to use the WTO system to stand up for the rights of Australian exporters," he said.
2022 vintage looks grim for some
While low prices are being offered by most wineries this vintage for red grape varieties, growers who are uncontracted may be unable to sell their grapes at all.
Mr Battaglene said it was difficult to predict how much fruit will be unharvested, but it was likely to be a significant volume.
"We think that we're moving into an oversupply situation. So there's just too much wine already in tanks for all those grapes to be picked," he said.
Mr Battaglene said the issue is likely to be felt in all winegrowing regions in Australia.
"It's not just going to be those heartland areas of the Murray Valley and the Riverina and the Riverland. It also goes into some of those areas that were traditionally higher value, grape regions so the pain will be spread," he said.
But the news is better for white grapes, where some varieties have seen price increases.
