May 17, 2018 / 8:45 AM / in 6 days

Australia is 'mobilized' to tackle wine hold-up at China customs: minister

SHANGHAI/SYDNEY (Reuters) - Australia’s trade minister said on a visit to Shanghai on Thursday he was trying to tackle customs delays facing Australia’s Treasury Wine Estates Ltd in China, amid a souring of relations between the two countries.

Australian Minister for Trade, Tourism and Investment, Steven Ciobo, attends a news conference of an Australian Football League event in Shanghai, China May 17, 2018. REUTERS/Aly Song

Treasury Wine, the world’s biggest listed winemaker and owner of the Penfolds, Wolf Blass and Rosemount labels, said it was facing delays getting some products through Chinese customs, raising fears a cooling of diplomatic relations was now affecting Australian exports.

“I’m mobilized, my office is mobilized, the Australian diplomatic mission here is mobilized and we will work out precisely what the situation is and if we can get to the bottom of it,” the minister, Steve Ciobo, told reporters at the beginning of a three-day visit.

Treasury Wine shares fell as much as 12 percent, their biggest fall since 2014. The stock finished the day down 6.2 percent, compared with a 0.2 percent decline in the broader market.

The customs delays have taken what was a diplomatic and political tussle, over what Prime Minister Malcolm Turnbull sees as undue Chinese influence, into the trade arena where more is at stake for Australia’s export-dependent economy, analysts said.

“Now it is imposing regulatory barriers without contravening the free trade agreement,” said Nick Bisley, an expert on international relations at Melbourne’s La Trobe University, referring to the 2015 trade deal.

“We are going to see more of this and this will be the worst the relationship has been since diplomatic relations began,” Bisley added.

Australian Minister for Trade, Tourism and Investment, Steven Ciobo, attends a news conference of an Australian Football League event in Shanghai, China May 17, 2018. REUTERS/Aly Song

China’s customs department did not immediately respond to a faxed request for comment.

Australia’s rift with China is unfolding against the backdrop of a much larger trade dispute between Beijing and Washington that has fanned worries of a full-blown trade war that could weigh on the global economy.

Chinese and U.S. trade delegates are starting a second round of talks on Thursday in Washington after threatening tit-for-tat tariffs on billions of dollars of goods.

American exporters have also faced hold-ups and ramped up inspections at China’s border in recent months, which trade experts said was part of Beijing’s playbook in trade disputes.

Australian Minister for Trade, Tourism and Investment, Steven Ciobo, attends a news conference of an Australian Football League event in Shanghai, China May 17, 2018. REUTERS/Aly Song

‘RICHER TOGETHER’

The customs delay comes during what Turnbull has called a “low ebb” in relations with China, where Australia sends A$93 billion ($70 billion) a year of exports from iron ore to infant formula.

Overall Australian wine exports to China grew by nearly two thirds in 2017, according to government data, making the wine industry one of the biggest beneficiaries of a 2015 free trade agreement between the countries.

Relations began to sour in November when Turnbull proposed registering lobbyists working for foreign countries, citing “disturbing reports about Chinese influence”. Legislation is set to go to parliament in weeks.

In April, the biennial Australia Week trade show in China was suspended after Beijing denied visas to Australian government officials, according to Australian media.

Australian business leaders warned that anti-China sentiment was hurting trade and costing companies opportunities with the country’s top trade partner.

Weeks later, Ciobo was on a plane to China, the first visit in more than six months by an Australian minister. He is expected to meet Chinese officials during a three-day trip.

In remarks prepared for an Australia-China business awards gala on Thursday night, Ciobo championed two-way trade and investment and sought to highlight Australia’s commitment to good ties with China.

“Australians are not making gains at the expense of Chinese, and Chinese are not making gains at the expense of Australians. Speaking plainly, our partnership is benefiting both sides and making Australians and Chinese richer together,” he said.

Contrary to “scare campaigns”, Chinese investment in Australia was modest, and Australia continued to welcome China’s rise and growth.

“For the partnership between Australia and China, if we find ourselves in choppy waters, we should bring our boats together and help each other to find a way to the other shore, avoiding the storm.”

Reporting by John Ruwitch; Writing by Darren Schuettler; Editing by Neil Fullick, Robert Birsel

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