Australian Prime Minister Malcolm Turnbull. Picture: EPA/DAVID MOIR
Australian Prime Minister Malcolm Turnbull. Picture: EPA/DAVID MOIR

Sydney — South African wine sellers such as recently relisted Distell are keen to enlist government’s help with trade rules that would help them sell more wine to China, but Australian wine makers have a whole different problem: their government is embroiled in a diplomatic row with Beijing that has thrown up export hurdles.

On Wednesday, Australian wine makers urged Prime Minister Malcolm Turnbull to visit China to resolve the diplomatic tension.

The row is blamed for trade obstacles that have raised concern for an export market expected to top A$1bn ($766m) in 2018.

Six Australian wine companies — including Treasury Wine Estates, the world’s biggest listed wine maker — have faced delays at Chinese customs since Turnbull complained of Chinese political interference late in 2017.

Six wine makers 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, CEO 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 in 2018. Left unresolved, the issue could become a sore point for the government ahead of elections due in 2019.

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.

In May, Ciobo 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 wine makers increasingly rely on rapidly growing Chinese sales to boost earnings.

Treasury Wine’s share price has dropped 6.5% since the owner of the Penfolds, Wolf Blass and Rosemount labels disclosed 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$848m in 2017 and were forecast to top A$1bn 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 tension to go away, another strain opened up on Tuesday when Australian officials accused China of applying undue pressure on Qantas Airways to refer to Taiwan as a Chinese territory.