Sunday, August 1, 2021
Finance

Trade war with China takes its toll on Aussie wine exports

Trade-war

During 2020–21, exports slumped by 10 per cent in value to $2.56bn, while export volume declined by 5 per cent to 695 million litres, according to Wine Australia

Australia’s trade spat with China has taken its toll on wine exports, with increased shipments to multiple markets failing to offset the decline.

During 2020–21, exports slumped by 10 per cent in value to $2.56bn, while export volume declined by 5 per cent to 695 million litres, according to industry group Wine Australia.

Wine Australia’s Rachel Triggs said the key factors for the falls were the downturn in exports to mainland China following the imposition of punitive tariffs and the cumulative effects of three consecutive lower vintages in 2018, 2019 and 2020, which meant there was less wine available to export.

But exports to the UK were at their highest level in a decade, Ms Triggs said, with the value leaping by 23 per cent to $472m, bested only by China, where $606m worth of exports was down a whopping 45 per cent.

The UK is now Australia’s biggest importer of wine by volume, up 16 per cent to 269 million litres last financial year, compared with 52 million litres sent to China, down 57 per cent.

Exports increased to the UK, Singapore, South Korea, Malaysia, Taiwan and Hong Kong by a combined $240m, but they did not offset the decline in exports to mainland China, Ms Triggs said.

The impact of the tariffs is starkly clear when looking at total exports to China for the March and June quarters. Exports plummeted from $13m for those periods this year compared with $419m in 2019–20 – before the effective boycott was imposed.

Penfolds owner Treasury Wine Estates confirmed in late March that the tariff rate was an eye-watering 175.6 per cent.

China has also targeted Australian beef, barley, lobsters and coal exports in the ongoing trade war – seemingly sparked by Australia banning Huawei participating in building the 5G network and joining calls for an inquiry into the origins of Covid-19.

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