Australian winemakers press PM to end rift with China

By Colin Packham

SYDNEY, Jun 6 : Australian winemakers on Wednesday urged Prime Minister Malcolm Turnbull to visit China to resolve diplomatic tensions blamed for trade obstacles that have raised concerns for an export market expected to top A$1 billion ($766 million) this year.

As many as six Australian wine companies, including Treasury Wine Estates Ltd – the world’s biggest-listed winemaker – have faced delays at Chinese customs since Turnbull complained of Chinese political interference late last year.

Six winemakers including Treasury held talks with Assistant Minister for Agriculture Anne Ruston on Wednesday to urge the government to do more to end the trade tensions, according to a source familiar with the talks.

“There is a meeting today with Senator Ruston, where it will be suggested that the prime minister travel to China,” Tony Battaglene, chief executive of industry body the Wine Federation of Australia, told Reuters ahead of the meeting.

“There is obvious concern about China from the government but for us, we must all be aware that they are an extremely important strategic partner for us.” Beef and citrus industry leaders have also expressed fears the diplomatic spat is harming exports, although China has denied targeting Australian products with customs delays.

Beijing has shunned Australian officials in recent months, casting doubt on a visit to China by Turnbull expected some time later this year. Left unresolved, the issue could become a sore point for the government ahead of elections due next year.

Trade Minister Steven Ciobo played down the exporters’ concerns and said that while Turnbull had “indicated a willingness” to visit China, any trip had to be “married against a number of other competing demands in terms of time”.

“There is a trade irritant that is there, but when you put it in the context of where trade is going, when you look at the growth we’ve had of beef and wine exports, I think it is important that we don’t mischaracterise what is happening,” he told reporters in Canberra.

Ciobo last month became the first elected Australian official to travel to China in more than seven months, but he was largely shunned during his three-day visit.

Australian Foreign Minister Julie Bishop has not visited China since 2016.

Turnbull did not immediately respond to a request for comment. Chinese customs and commerce ministry officials also did not immediately respond.

GLASS HALF FULL

While the Australian wine industry has not put a value on the exports languishing at China’s ports, investors are concerned as winemakers increasingly rely on rapidly growing Chinese sales to boost earnings.

Treasury Wine’s share price has dropped 6.5 percent since the owner of the Penfolds, Wolf Blass and Rosemount labels revealed the Chinese customs delays on May 17.

Battaglene said Australian government lobbying had seen wine shipments begin to slowly flow again into China, but a backlog remained.

Australia’s wine exports to China were worth A$848 million last year and are forecast to top A$1 billion in 2018, according to government figures, although some analysts now say those hopes look optimistic.

“China is Australia’s growth market. Anything that inhibits that trade is a major worry,” said Phin Ziebell, an agribusiness economist at National Australia Bank.

Patrick Hutchinson, CEO of the Australian Meat Industry Council, said 26 companies were still waiting for permission to begin exports to China two years after Chinese Premier Li Keqiang, during a visit to Sydney, agreed to increase access for Australian beef exporters.

While exporters want the tensions to go away, another strain opened up on Tuesday when Australian officials accused China of applying undue pressure on Qantas Airways Ltd to refer to Taiwan as a Chinese territory.

/Reuters

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