China lifts tariffs on Australian wine, ends three-year freeze in trade

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Last Updated, Mar 28, 2024, 8:53 AM

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Hand-picked grapes at the Billanook Estate vineyard in Chirnside Park, Victoria, Australia, on March 18, 2024.

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China will lift anti-dumping and anti-subsidy tariffs on Australian wine from March 29, the Chinese commerce ministry said on Thursday, ending three years of punitive levies and offering long-awaited relief to Australian wine producers.

The tariffs, of up to 218.4%, were first imposed in March 2021 for a period of five years along with a host of other trade barriers on Australian commodities when ties soured after Canberra called for a probe into the origins of COVID-19.

Ties have improved significantly since last year, leading China to steadily lifting trade hurdles on Australian goods ranging from barley to coal, and raising hopes the punishing tariffs on shipments to Australia’s top wine export market would soon be removed.

“Given the situation in China’s wine market has changed, the anti-dumping and anti-subsidy tariff imposed on wine imported from Australia is no longer necessary,” the commerce ministry said in a statement.

Previously, Australian wines imported into China were subject to zero tariffs after the signing of a free trade agreement in 2015, giving them a 14% tariff advantage over many other wine-producing nations.

In the first half of 2023, Australian wine accounted for only 0.14% of Chinese wine imports compared with 27.46% in 2020 before the duties were imposed, according to the commerce ministry statement.

“We welcome this outcome, which comes at a critical time for the Australian wine industry,” the Australian government said in a statement.

“Since 2020, China’s duties on Australian wine effectively made it unviable for Australian producers to export bottled wine to that market. Australia’s wine exports to China were worth $1.1 billion in 2019.”

Beijing started imposing tariffs on Australian products in 2020, prompting Canberra to complain to the World Trade Organisation (WTO). When the tariffs on Australian wine were levied in 2021, Canberra urged the WTO to arbitrate in the dispute.

Under the joint efforts of both sides, China and Australia reached a consensus on the proper settlement of disputes under the WTO framework, He Yadong, a spokesman at the Chinese commerce ministry, told reporters on Thursday.

The removal of the Chinese duties means Australia will discontinue its legal proceedings at the WTO, according to the Australian statement.

Australia’s top publicly listed winemaker, Treasury Wine Estates <TWE.AX>, said it welcomed the announcement and will start partnering with customers in China to expand sales and marketing, as well as brand management.

“Today’s announcement is a significant positive not only for Treasury Wine Estates, but also for the Australian wine industry and wine consumers in China,” CEO Tim Ford said in a statement.

“This is a medium-term growth opportunity that we will pursue in a deliberate and sustainable manner, focused on growing our portfolio in China.”

The lifting of the tariffs will also be a welcome move to vine growers in Australia as millions of vines are being destroyed to rein in overproduction amid falling consumption of wine worldwide.

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