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China launches an investigation into some wine imports from Australia

China’s Ministry of Commerce said Tuesday it is launching an anti-dumping investigation into some wines imported from Australia.

Australia’s Federal Trade Minister Simon Birmingham said in a statement that Chinese authorities “have also advised Australia that they are considering a request to launch a countervailing duties investigation.”

“This is a very disappointing and perplexing development,” Birmingham said, adding that “Australian wine is not sold at below market prices and exports are not subsidised.”

The announcement comes amid growing geopolitical tensions between the two countries. China is Australia’s top export market, and by far the largest destination for the island continent’s wine exports by value, according to the government’s industry authority, Wine Australia.

The Chinese investigation targets “wines in containers holding 2 liters or less,” according to an English translation on the Commerce Ministry website. 

A typical bottle of wine is about 0.75 liters. The reason for the probe was not immediately clear.

The investigation will last for one year — until August 18, 2021 — with the potential of being extended until February 18, 2022, under special circumstances, according to the ministry’s online announcement.

Australia had the largest share of China’s imported wine market at 37%, according to data for the 12 months through May from Global Trade Atlas and cited by Wine Australia in an August 4 report. 

France was second at 27%, followed by Chile at 13%, the report said.

Shares of Australian wine giant drop

Trading in shares of Australia’s biggest wine company Treasury Wine Estates was briefly halted pending an announcement, according to a statement on the Australian Stock Exchange website. The shares tumbled more than 13% in Tuesday trading.

Treasury Wine Estates later said in a statement released by the Australian Stock Exchange that the company will cooperate with any requests for information from Chinese or Australian authorities. The company added it will remain focused on building its premium and luxury brands, and generally working to grow its contribution to China.

Australia exported 62% of its wine produced in the 12 months through the end of June, according to Wine Australia’s report.

Mainland China was by far the largest market by value, with exports rising 0.7% to 1.1 billion Australian dollars ($790 million), the report said, noting growth in exports at higher prices and a decline at the lower-end of the market.

Wine Australia did not immediately respond to a CNBC request for comment.

— CNBC’s Will Koulouris contributed to this report.

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