China Starts Second Australian Wine Probe as Tensions Mount

(Bloomberg) --

Australia’s winemakers have been hit by a second Chinese government probe, as trade tensions between the countries escalate.

China has started an anti-subsidy investigation into wines in containers holding two liters or less from Australia, according to a statement on the Ministry of Commerce website. The announcement comes less than two weeks after China, the biggest international buyer of Australian wine, said it had started an anti-dumping probe into the same product.

The investigation is the latest blow to the Australian industry, which has been hit by slower demand amid global Covid-19 lockdowns, drought-affected vintages, as well as smoke taint and damage from the country’s unprecedented bushfire season last summer.

Industry group Australian Grape & Wine said China had previously flagged the potential for an anti-subsidy investigation and the sector was well placed to respond. It would fully cooperate through the investigation process.

Ties between the two trading partners have increasingly frayed in recent years. In addition to banning Huawei Technologies Co. from participating in Australia’s 5G network, Australia’s push for an independent inquiry into the origins of the Covid-19 outbreak sparked a Chinese backlash.

China halted some beef imports earlier this year, with a fifth meatworks banned from shipping product there just last week.

It also put tariffs of more than 80% on Australia’s barley exports in May after the conclusion of earlier anti-dumping and anti-subsidy probes. In addition, the Chinese ambassador to Canberra said in April that Chinese consumers might choose to boycott the nation’s exports because of strained relations, a comment that was seen as a threat in Australia.

The wine subsidy probe is due to end by Aug. 31, 2021 and can be extended to Feb. 28, 2022, according to the statement.

©2020 Bloomberg L.P.