Interview on 4BC, Drive, with Scott Emerson

Scott Emerson: China has put tariffs up by 200 per cent on Australian wines, which is a massive blow to Australia's Chinese exports. Now, China's Ministry of Commerce has issued this preliminary ruling over investigation into Australian wine after China has accused Australian producers of dumping wine into China at a discount rate, reducing the competitiveness for local producers. The tariff rate will be between 107 per cent and 212 per cent on Australian wines. And don't forget, here we have $1.2 billion per year of wine being exported to China from Australia.

Now I'm joined by Simon Birmingham. He's the Federal Minister for Trade. Minister, thanks for being on 4BC Drive this afternoon.

Simon Birmingham: Thanks for the opportunity, Scott. Good to be with you.

Scott Emerson: How big a blow is this to Australia's wine industry?

Simon Birmingham: Oh, this is very significant. China, by value, is the largest market for Australian wine. We ship a bit more volume in other parts but that indeed is part of the irony of this whole decision. China alleges that Australian wine is somehow dumped below cost on the Chinese market, when in fact the price per litre that our wine makers get for selling their products to China is the best price in the world basically; and that Australian wine in the Chinese market is also, I think, the first or second highest priced in that market. So, you actually have a situation where the evidence is very, very clear that our wine is highly valued, highly priced, and that certainly our wine makers aren't dumping products there and they're definitely not receiving subsidies from the Australian Government to do so.

Scott Emerson: Now, you made that point a couple of months ago when this was first floated, that China might impose this kind of the penalties on Australia, but clearly they haven't listened to that.

Simon Birmingham: We have made that point time and time again, and we've supported the Australian wine industry in terms of the evidence that they have provided to China to detail just the fact that they operate purely on commercial and market terms. And so, it is deeply unsatisfactory that China has seemingly ignored all of that evidence, ignored the facts, and gone ahead to impose this trade-distorting penalty against our wine industry, regardless of the evidence. And of course, I can understand and the Government understands why the perception is growing, not just in Australia, but around the world, that this accumulation of sanctions against Australia and Australian trade by China is somehow driven by other things from the Chinese perspective, and if it is and they're undertaking that, then it's totally against the type of commitment they've made, not only to Australia, but to other nations in relation to their actions and the way in which trade and commerce should be facilitated.

Scott Emerson: I'm talking to Simon Birmingham, the Federal Minister for Trade. Minister, as you say, beef, barley, wine now, what is driving this? Does this come back to us seeking an independent inquiry into the origins of COVID?

Simon Birmingham: Well, you had this peculiar instance only this time last week where the Chinese embassy in Australia was allegedly and anonymously handing out a list of some 14 apparent grievances. Now, that is up to them to explain and justify, but I'd say in response to those sorts of concerns that the Australian Government goes about setting our foreign investment laws, our laws and protections for critical infrastructure and national security in a way that unashamedly protects Australia's interests, just as every other nation on the planet, including China, goes about setting such things in ways that protect their interests. That still shouldn't result in penalties and punishment for the ordinary businesses and individuals who trade and engage between our nations. This is something that doesn't just hurt Australian businesses, but it impacts on the customers who buy from them, on the Chinese businesses who rely on that product. And ultimately, it's bad for economic growth and prospects right across both countries and therefore the region.

Scott Emerson: As you say, we had that list of grievances issued last week. Covered COVID, covered Huawei, a whole series of concerns from China about Australia. Is China trying to make an example of Australia as a warning to other countries not to take it on?

Simon Birmingham: First question is very much for China, but as I said, I can understand why that perception is growing. However, I think the problem for China is that the perception they are creating is that trading with China is a high risk proposition. And it is through trade and through opening up the Chinese economy and Chinese markets that China has been able to lift hundreds of millions of people out of poverty, grow its economy, and this is a good thing. As Prime Minister Scott Morrison re-emphasised in the last week, we celebrate the success of lifting hundreds of millions out of poverty. We welcome the accomplishment of China in that regard, and we want to see it continue. But unfortunately, these type of practices would just heighten the risk for businesses and countries of trading with China will only be of long-term detriment to them in terms of the way in which many other businesses or nations may perceive these decisions and their impact.

Scott Emerson: Well, Simon Birmingham, where do we go from here?

Simon Birmingham: Well, we will do as Australia always does, and that is continue to defend our industries. We will continue to defend their honour and integrity. We will use every possible avenue through the processes we have with China, but also through the World Trade Organization to seek to have these sorts of decisions overturned, but we'll also back our industries to try to access other markets and to diversify. The Australian Government certainly never said to any industry: put all your eggs in one basket or do all of your trade with China. What we've done over the last seven years is do trade agreements, not only with China, but also with Japan, Korea, Canada, Mexico, Vietnam, Indonesia, others, and indeed many more that we're pursuing including with the European Union and the United Kingdom, and so we're going to help our exporters to hopefully grow their presence in those markets so long as these disruptions are maintained.

Scott Emerson: Trade Minister, Simon Birmingham, thank you for being on 4BC Drive this afternoon.

Simon Birmingham: Thanks Scott. My pleasure.