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Australia’s leading wine authority to close office in China as exports plunge

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Lin Tiangui, a representative of Winston Wine, looks at a bottles of wine produced from Winston Wine’s own Australian winery at one of its stores in Shanghai, China on October 18, 2011.

Qilai Shen | Bloomberg | In Pictures | Corbis Historical | Getty Images

Australia’s leading wine industry body Wine Australia will be closing its only physical office in China after sales to the greater China succumb to Beijing’s prohibitive duties.

“Wine Australia has made the difficult decision to close our physical office in Shanghai. This decision follows extensive consultation with the Australian grape and wine sector and is based on the current environment and market opportunity,” a Wine Australia spokeswoman said.

“Wine Australia will continue to maintain our brand presence in China via our wine trade and consumer facing social media channels, and will continue to work closely with in-market trade representatives on brand building and marketing campaigns.”

The once 1.2 billion Australian dollar-a-year trade ($830 million) has whittled down to just over AU$200 million at the end of March, an alleged casualty of the tension between the two countries.

Wine Australia said it will continue to operate in China as it does in other markets, through “relationships with key in-market agency and marketing partners, trade show organizers and education networks,” a format that tends to be used for smaller trading markets.

The industry body is responsible for supporting Australia’s wine industry through research and development as well as establishing new export markets.

The once-envied Chinese trade for Australian exporters however suffered a blow in 2020 when Beijing launched an investigation into allegations of dumping cheap Australian wine in China.

Beijing subsequently imposed anti-dumping duties of between 116.2% and 218.4%, rendering Australian wines uncompetitive in the Chinese market. The matter is being arbitrated at the World Trade Organization.

Anti-dumping and anti-subsidy duties are protectionist tariffs that governments impose on imports that they deem to be below fair market value, usually at prices lower than the exporting countries’ domestic markets.

The punitive tariffs were among a series of Chinese trade restrictions on Australian exports including barley, coal and lobsters.

Many of these restrictions were informally enacted after the two countries fell out when Canberra called for an independent inquiry into the origins of the coronavirus, without diplomatically consulting Beijing.

Australia’s national association of wine producers, Australian Grape and Wine, said the closure of the Shanghai office did not signal “an end to an era.” It noted that despite the challenges, exporters would like to return to the Chinese market and Chinese demand for Australian wines remained buoyant.

“We understand and support Wine Australia’s decision, which is based on operational requirements,” AGW General Manager Lee McLean said.

“We also note that there is still strong demand for Australian wine in China and we hope Chinese consumers will have the opportunity to enjoy Australian wines again at some point in the future.”

Australian exporters struggled with wine sales in China after the duties were imposed, data from Wine Australia for the 12 months ending in March. They have since diverted sales to other markets like the U.S. and U.K., but still faced pandemic-related challenges such as supply chain and global freight disruptions.

The U.K. has since dethroned China as the top destination for Australia’s wine exports, although that market is less than half the size of the Chinese market at its height.

Australia exports 60% of its wine production and China previously accounted for about 40% of those exports.

But there have been some signs of thawing between the two major trading partners in recent weeks after the election of a new Labor government in Australia.

Earlier this month, Australia’s new defense minister, Richard Marles, and China’s defense minister, Wei Fenghe, met on the sidelines of the Shangri-La Dialogue in Singapore, also known as the “Asia Security Summit.”

Before this, there had been no ministerial visits or conversations between the two countries for several years.

Political observers also said Marles’ speech at the summit indicated there had been a change in Canberra’s tone towards Beijing. Using less hawkish rhetoric, Marles recognized the reality of China’s rise but framed it in terms of responsibilities that come with it, Nick Bisley, professor of international relations at La Trobe University wrote in an opinion piece last week.

Chinese Premier Li Keqiang also sent a congratulatory message to new Australian Prime Minister Anthony Albanese after his win in the Australian federal elections in late May and in turn received “an appreciation letter.”



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Kim Kardashian, Floyd Mayweather crypto scam lawsuit dismissed

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A federal judge on Wednesday dismissed a proposed class action lawsuit by investors against the founders of the cryptocurrency EthereumMax, as well as celebrity endorsers including Kim Kardashian and boxer Floyd Mayweather Jr. over their promotion of the cryptocurrency on social media.

Investors who bought EMAX tokens alleged they had suffered losses after taking the word of the celebrity influencers about the value of the crypto. The suit claims the defendants engaged in a conspiracy to artificially inflate the value of the EMAX tokens.

Judge Michael Fitzgerald wrote that he recognized that the lawsuit’s claims raised legitimate worries about “celebrities’ ability to readily persuade millions of undiscerning followers to buy snake oil with unprecedented ease and reach.”

“But, while the law certainly places limits on those advertisers, it also expects investors to act reasonably before basing their bets on the zeitgeist of the moment,” wrote Fitzgerald, of the Central District of California.

The judge found that the plaintiffs’ allegations were insufficiently backed, especially “given the heightened pleading standards” for fraud claims, according to his ruling in U.S. District Court in Los Angeles.

In addition to Kardashian, Mayweather and former Boston Celtics star Paul Pierce, the defendants in the case included Steve Gentile and Giovanni Perone, the co-founders of EthereumMax, and Justin French, a consultant and developer for the cryptocurrency, court documents state.

Fitzgerald in his ruling said he would allow lawyers for the plaintiffs to refile their suit after amending some of their claims under a number of the statutes cited in the original complaint, which included the Racketeer Influenced and Corrupt Organizations Act, also known as RICO.

“We’re pleased with the court’s well-reasoned decision on the case,” Michael Rhodes, a lawyer for Kardashian, told CNBC.

The dismissal came weeks after investors in fallen crypto exchange FTX filed a class-action lawsuit against former FTX CEO Sam Bankman-Fried and celebrity advertisers for the company, among them NFL superstar Tom Brady, for allegedly overstating the value of the crypto tokens in promotional messaging.

And the ruling came two months after Kardashian agreed to pay $1.26 million, and not to promote cryptocurrency for three years, to settle claims by the SEC for her failure to disclose a $250,000 payment touting EthereumMax on her Instagram account.

Fitzgerald in his ruling Wednesday said the EthereumMax lawsuit reflects a broader conflict surrounding celebrity and influencer promotional schemes.

“This action demonstrates that just about anyone with the technical skills and/or connections can mint a new currency and create their own digital market overnight,” Fitzgerald wrote in his dismissal.

Investors sued EthereumMax and its celebrity advertisers in January after a slew of influencers started snagging sponsorships to promote cryptocurrencies to their millions of social media followers.

Kardashian’s Instagram post in June 2021 had written, “Are you guys into crypto??? This is not financial advice but sharing what my friends told me about the Ethereum Max token.”

Her post included “#ad” at the bottom, indicating she had been sponsored. But it did not disclose her $250,000 payment from EthereumMax.

Mayweather promoted EMAX at a boxing match and a large Miami bitcoin conference in June 2021.

But by January, the cryptocurrency had lost 97% of its value.

Fitzgerald at a hearing last month indicated he was inclined to dismiss the case.

Bloomberg News, in an article about that hearing, said that an attorney for the plaintiffs in the suit asked the judge to allow him to revise the suit’s racketeering claims to show how the statements by the celebrity defendants harmed the investors.

“If plaintiffs had known the true facts related to the promoters’ financial interest in the tokens, and that they were being paid to shill these tokens, they wouldn’t have paid as much for the tokens as they did,” the attorney, John Jasnoch, told Fitzgerald, according to a transcript cited by Bloomberg.



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Cathie Wood says the Fed is making a serious mistake as bond market flashes worst signal since 1980s

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How the U.S. became a global corn superpower

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The United States has just about 90 million planted acres of corn, and there’s a reason people refer to the crop as yellow gold.

In 2021, U.S. corn was worth over $86 billion, according to calculations from FarmDoc and the United States Department of Agriculture.

According to the USDA, the U.S. is largest consumer, producer and exporter of corn in the world.

“We’re really good at [corn production],” Seth Meyer, chief economist at the USDA, told CNBC. “And that’s why you see big acres, big demand, export competitiveness.”

It’s not just what we eat.

“We turbocharged the value of corn through the application of science,” Scott Irwin, agricultural economist and professor at the University of Illinois, told CNBC.

Corn is in what we buy, including medications and textiles, and corn is turned into ethanol, which helps to fuel cars across the nation.

The rest of the world relies on U.S. corn, too. 

At $2.2 billion in 2019, corn is the most heavily subsidized of all crops in the country.

“A lot of these subsidies … do get embedded into the cost of farmland and they essentially bid up the price of farmland marginally,” Joseph Glauber, senior research fellow at the International Food Policy Research Institute and former USDA chief economist, told CNBC. “So the benefits accrue largely to those who own land.”

The federal crop insurance program’s net spending is forecast to increase to nearly $40 billion from 2021 through 2025, according to the Congressional Budget Office.

At the same time, farmland values have reached all-time record highs.

“Do we get the corn acres because we’ve got the support, or do we have the support because we have the corn acres?” Meyer said, posing the chicken-and-egg question about the nation’s grain superpower.

Watch the video above to learn more about how corn fuels the U.S. economy from its people to its vehicles, the power of the corn belt states, the role of subsidies and where government policy for the industry may go from here.



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