June 6, 2018 / 1:19 AM / 19 days ago

Australian winemakers press prime minister to end rift with China

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

Bottles of Penfolds Grange wine and other varieties, made by Australian wine maker Penfolds and owned by Australia's Treasury Wine Estates, sit on shelves for sale at a winery located in the Hunter Valley, north of Sydney, Australia, February 14, 2018. REUTERS/David Gray

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 tension, 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.

China pays great attention to exchanges with other countries, and mutual visits need both sides to communicate and have consultations to reach a consensus, Chinese foreign ministry spokeswoman Hua Chunying said on Wednesday.

“As for a specific visit, I have no information on this,” Hua said, when asked at a daily news briefing when an Australian leader might come to China.

Trade Minister Steven Ciobo played down the exporters’ concerns. While Turnbull had “indicated a willingness” to visit China, he said, 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 officials 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.

“As you know, customs in any country can carry out spot checks on some products from relevant companies. This is normal enforcement behaviour. The aim is to protect consumer rights. Communication between the two countries’ customs is smooth,” the Chinese foreign ministry spokeswoman said.

Hua added that according to her understanding, since China and Australia signed their free trade deal, the two customs authorities had set up an effective communication system to handle any problems in a timely way.

Both countries are in communication over the issue, and China’s customs is processing related shipment applications in line with normal procedures, the Chinese commerce ministry said in response to a fax message from Reuters seeking comment.

Australia’s wine exports to China were worth A$848 million last year and are forecast to top A$1 billion in 2018, government figures show, though 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, chief executive of the Australian Meat Industry Council, said 26 companies were still waiting for permission to begin exports to China two years after Premier Li Keqiang, during a visit to Sydney, agreed to increase access.

While exporters want the tension 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.

($1=1.3051 Australian dollars)

Reporting by Colin Packham in Sydney; Additional reporting by Ben Blanchard and Stella Qiu in Beijing; Editing by Stephen Coates and Clarence Fernandez

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