New Customs Formalities cause delays of shipments of Australian wine into China from 2018

Context

In 2018, Australian meda began to report that shipments of Australian wine were experiencing extended delays at borders in China.

Australia’s largest exporter of wine to China, Treasury Wine Estates, made a disclosure to the Australian Stock Exchange on 17 May 2018, in which it stated that it was experiencing customs delays, and that it was

“seeking greater understanding of new and additional verification requirements which have been applied since April 2018, and seemingly appear to only apply to Australian Country of Origin wines, and to Australian exporters operating “warehouse models”.”

Disclosure by TWE to the Australian Stock Exchange (link)

Some media reports attributed the delays primarily to new customs rules introduced in April 2018, while others highlighted ‘tension in the bilateral relationship … [leading to] heightened scrutiny,” particularly in relation to country of origin certificates. The same article quoted a senior Chinese analyst as saying ” China’s Customs authorities can require a “more regulated” approval procedure and “more thorough” customs checks if the bilateral relationship was not smooth.”

One of the reasons to which the border difficulties were attributed was Australia’s introduction of new foreign interference laws., but also to Australia expressing concerns about “rising Chinese influence in the Pacific” However at the same time, the Australian Government was also urging caution, with the Trade Minster Steven Ciobo stating that while relations had cooled between the two countries, that the difficulties were an ‘irritant’ that should not be overemphasised.

Impact

While there was a substantial drop in the price of the share price of Treasury Wines, this should not be attributed to customs delays as it occurred in the context of predictions that there was a substantial glut of wine in the Chinese market.

Status

The delays impacted Australian wine for only a few weeks.

References

Darren Gray, ‘Treasury Wines reports a hiccup in its exports to China’ Sydney Morning Herald (17 May 2018), available at: https://www.smh.com.au/business/companies/treasury-wines-reports-a-hiccup-in-its-exports-to-china-20180517-p4zftk.html

Fergus Hanson, Emilia Currey and Tracy Beattie, ‘The Chinese Communist Party’s Coercive Diplomacy’, Policy Brief No. 36/2020, available at: https://www.aspi.org.au/report/chinese-communist-partys-coercive-diplomacy, at 27

Reuters, ‘Australia’s Treasury Wine Estates confirms delays in shipments to China’ (17 May 2018), available at: https://www.reuters.com/article/idUSFWN1SN128/.

The Australian, ‘Chinese wine import slowdown due to paperwork changes’ (20 May 2018), available at: https://theaustralian.com.au/business/chinese-wine-import-slowdown-due-to-paperwork-changes-mcwilliams/news-story/f2d9812df91637236e6707919982d05f.

Michael Smith, ‘Political tension blamed on Treasury’s China Customs Headache’ (17 May 2018), available at: https://www.afr.com/companies/retail/political-tension-blamed-on-treasurys-china-customs-headache-20180517-h1068g