China will extend tariffs on Australian wine exports for another five years, with the taxes expected to be as high as 218.4 per cent.
The Chinese Ministry of Commerce has described the charges as anti-dumping measures, with the charges to apply from Sunday.
“China’s domestic wine industry has suffered material damage, and there is a causal relationship between the dumping and subsidies and the material damage,” the ministry said in a press release.
“The Ministry of Commerce conducted investigations in strict accordance with relevant Chinese laws and regulations and [World Trade Organisation] rules, and made the final ruling.”
It alleged that dumping had occurred in imported Australian wine, substantially undercutting the local wine industry, and that Australian exporters had been selling wine at below a fair market rate.
The Asian megapower last year announced it would impose temporary tariffs on Australian wine from 28 November for four months, with barley, beef, coal, timber and lobster also caught up in the trade sanctions.
Prime Minister Scott Morrison slammed the move on Saturday, describing it as "not okay".
He said Australia will "continue to be patient" as it works through the issues with China.
"We completely reject [this allegation] that has been placed on Australian product and by their own admission, publicly, as some form of retaliation for Australians standing up for our values, that's not okay," Morrison said.
The Australian wine industry is expected to appeal to the World Trade Organisation to resolve the dispute, according to Reuters.
“While it’s disappointing, the industry is not surprised by today’s decision,” said Tony Battaglene, Chief Executive of Australian Grape & Wine.
“We continue to reject the allegations levelled against Australian Grape & Wine members and have approached both investigations as collaboratively and transparently as possible.”
He said the industry is now focused on developing new markets and repairing the Chinese-Australian trade relationship.
"The Government will be extremely disappointed if China makes a final determination to impose duties – we are not aware of any evidence that Australian wine has been dumped or injuriously subsidised in the Chinese market,” Trade Minister Dan Tehan said.
"The Government will continue to work closely with the Australian wine industry, including on possible next steps in the event that final duties are imposed."
Prior to the trade spat, China had imported nearly 40 per cent of Australia’s wine exports, with the relationship valued at $1.28 billion in 2019.