AUSTRALIA is almost certain to dispute China's wine tariffs with the World Trade Organisation, the Trade Minister says, with the government in the final stages of preparing its legal case.
The Australian wine industry is still struggling to recover after the Asian superpower imposed a five-year tariff of more than 200 per cent on Aussie winemakers, accusing them of dumping wine into China, effectively closing the market.
Trade Minister Dan Tehan said it was "highly likely" that the federal government will decided to take the case to the WTO for an independent verdict.
"We'll make a decision on that in the next couple of weeks," Mr Tehan said.
"We're making sure that it is a robust legal case because if you're going to take on these disputes, you've got to make sure that you do your best to win them.
"We're now looking at dotting the i's and crossing the t's [of the legal case]."
Wine Grape council of SA chair and Barossa Valley winemaker Adrian Hoffman said the impact of the Chinese tariffs have varied from vineyard to vineyard.
"Businesses that only had a very small footprint in China have been able to diversify quickly, they picked up extra sales in the domestic and overseas market," Mr Hoffman said.
"I know a couple of wine companies in the Barossa that were 95 per cent to China, and it's absolutely decimated them. It's going to hurt them really badly."
Some exporters have been able to get around the tariffs, which have been placed on imports of two litres or less, with supersized packaging.
"We've had customers come to us and say 'we use it for functions anyway, can you put it into three-litre bottles," Mr Hoffman said.
"People in China haven't been communicated to about why Australian wines have come off the shelf. They just know what they like, and if they really particularly like something, they'll find ways around it."
Mr Tehan said there had been some market diversification, with wine exports to the United Kingdom increasing 33 per cent, which could increase further once the pending free-trade agreement is signed.
Australia has already launched a dispute against China with the WTO over the barley sanctions, which more than a dozen countries have registered as third-parties.
"My strong view since I've taken on this portfolio is that we have to continue to take a principle approach when it comes to trade policy," Mr Tehan said.
"We have no other option. If we don't take a principle policy approach, then other countries will be less likely to do so and in the end that will hurt us more than it will the other economic powers."