Trade & Market Access
Frequently Asked Questions
31 August 2020
What is the anti-dumping and countervailing duties investigation?
The China Alcoholic Drinks Association (CADA) has requested the Chinese Ministry of Commerce (MOFCOM) launch separate anti-dumping and countervailing duties investigations on Australian wine in China. MOFCOM on 18 August 2020 agreed to proceed with an anti-dumping investigation and on 31 August 2020 initiated the previously flagged countervailing duties investigation.
Anti-dumping: If a company exports a product at a price lower than the price it normally charges on its own home market, it is said to be ‘dumping’ the product. Broadly speaking, the World Trade Organisation (WTO) Anti-Dumping Agreement allows governments to act against dumping where there is genuine (’material’) injury to the competing domestic industry caused by those dumped imports. In order to do that, the investigating government has to be able to show that dumping is taking place, calculate the extent of dumping (how much lower the export price is compared to the exporter’s home market price), and show that the dumping is causing injury or threatening to do so. Anti-dumping duties are imposed on an individual exporter basis but where there are many exporters, the examination may be limited to a few companies (‘sampling’) yet duties still applied widely across the entire industry.
The Chinese Government will issue a detailed questionnaire to all interested parties that have registered, with a timeline for responses in 37 days. The questionnaire will be in Chinese and the responses must also be in Chinese. The responses will require a lot of detailed confidential information around cost of production and cost of sales. A non-confidential/public version of any questionnaires containing confidential information must be submitted. If the questionnaire is not completed to the satisfaction of MOFCOM, then the company will be deemed ‘uncooperative’.
Countervailing duties: Similarly, in response to an application from a domestic industry, a country can launch a countervailing duty investigation and ultimately charge extra duty (known as ‘countervailing duty’) on subsidised imports that are found to be hurting domestic producers. Countervailing duty can only be charged after the importing country has conducted a detailed investigation similar to that required for anti-dumping action. The investigation will necessarily examine Australian Government subsidy programs which may benefit the wine sector.
CADA (the applicant) has cited a range of Australian Government programs, most of which were also raised in the Barley action (that culminated on 19 May 2020 with the Chinese Government imposing a combined anti-dumping and countervailing duty of 80.5 per cent on Australian barley), with the addition of the Wine Equalisation Tax, the associated WET rebate, and other wine-specific measures.
I export wine to China. How will this investigation affect my exports?
Right now, it does not have an immediate impact.
An anti-dumping or countervailing duty investigation may result in the application of duties. These duties are in place for five years unless reviewed or revoked. These can be applied to individual companies (i.e. individual dumping or subsidy margins) in addition to applying to all Australian imports (so-called ‘residual rate’). Provisional measures in the form of tariffs could be imposed where MOFCOM has issued a preliminary affirmative determination that such measures are necessary to prevent injury to the Chinese domestic industry during the investigation. It is up to MOFCOM’s discretion if provisional measures are applied and at what rate. The earliest any provisional measures could be applied would be 60 days from the commencement of the investigation (commencement 18 August 2020).
While there is no clarity yet on the potential duties that could be applied, CADA’s request to MOFCOM asked it to consider applying duties of 200 per cent for the anti-dumping case and an additional unspecified level as part of the countervailing component.
Regardless of any Australian wine companies’ involvement in the investigation, should there be a final determination to impose duties, these duties are applied across all Australian wine exports to China.
The risk of these duties being applied either provisionally and/or following the final determination should be considered by all Australian exporters to China.
What is involved in the investigation and what are the timelines?
The anti-dumping investigation was initiated on 18 August 2020 and any associated timelines below should be taken from that point. The year that is being considered by MOFCOM – the so-called period of investigation for the purposes of establishing whether or not the product was dumped – is calendar year 2019. The period of investigation for the purposes of determining injury is calendar years 2015-2019.
As part of the investigation, the applicant (CADA) identified 10 Australian wine exporters from whom they will seek information as part of the investigation. If a named company has not exported to China, then there is no need for that company to register as an interested party. Other identified wine exporters to China are encouraged to engage in the process. If having registered and failed to engage in the process, it will likely be seen as withholding information and that may have negative implications for the overall investigation outcome. In order to participate, these companies will need to register with MOFCOM. Other Australian exporters to China, that are not listed, can also voluntarily register to be part of the investigation. All companies that register to participate will then be provided with a questionnaire from MOFCOM seeking detailed information about their sales, exports and other details of their wine sales in China. We encourage any companies considering taking this step to contact Australian Grape & Wine before they begin this process. We have posted samples of the questionnaire in the recently barley enquiry on our website here for information.
China-Wine: Anti-Dumping Investigation Timeline
|18 August 2020||AD investigation initiation (public notice)|
|7 September 2020||Deadline for AD registration as interested party (20 days from initiation)|
|7 September 2020||Deadline for AD written submissions in response to initiation (20 days from initiation)|
|17 September 2020||Deadline for MOFCOM to issue AD questionnaires (within 10 days from the deadline for registration)|
|TBA||Deadline for submission of AD questionnaire responses (should have (a minimum of) 30 days to complete with the possibility of extension)|
|17 October 2020||Earliest possible date for AD provisional measures (60 days from initiation of investigation)|
|18 August 2021||Deadline for Final Determination and decision on imposition of measures|
How will I know if MOFCOM has identified my wine export business as one of the 10 named Australian wine exporters?
Australian Grape & Wine and Wine Australia are in contact with the 10 named companies and are assisting with their engagement with the process.
If I export to China, do I need to provide information towards this investigation?
Other than the companies that have been listed by MOFCOM no exporter will be required to engage with this investigation. Additional companies may voluntarily participate and be interested parties. Companies may also decide that it is in their interest to register and provide information. It is important that the sector is open, transparent and as accurate as possible in its provision of information. Also, those participating businesses should cover a broad representation of Australian wines exports to China. Companies that have not been listed by MOFCOM can voluntarily register to participate in the investigation. Australian Grape & Wine may seek assistance from other companies to ensure that we have a representative sample of producers and exporters to enable a suitable defence against the allegations.
If I am considering registering, what would I be required to provide and what should I do?
If you are not one of the listed export companies and are considering your involvement, please talk to Tony Battaglene or Lee McLean at Australian Grape & Wine to discuss the process and the potential implications of participation. Australian Grape & Wine will assist in the preparation and translation of submissions.
This is a highly intensive, resource-heavy process that will require extensive provision of highly commercially sensitive information regarding your exports to China. This information will need to be provided in MOFCOM’s determined format, which includes an 80-page questionnaire that will require translation into Chinese and possibly legal notarisation. Legal and financial advice may also be needed and the timeline for provision of this information is extremely short with limited scope for extension. We have posted samples of the questionnaire in the recently barley enquiry on our website here for information.
If I am approached for comment on this issue what should I say?
It is important that the tone of any public communication on this issue remains measured and considered. Questions and inquiries should be referred to the Australian wine industry’s Media Management Team for further advice and coordination of a response on 0424 135 381 or 0417 819 978.
Who can I contact in the Australian wine industry about this situation?
Australian Grape & Wine and Wine Australia are coordinating the sector’s response within industry and in collaboration with the Australian Government.
Any questions or enquiries can be directed to:
Australian Grape & Wine
Tony Battaglene – email@example.com, mob. -0413 014 807
Lee McLean – firstname.lastname@example.org