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Farrell ‘very hopeful’ that China will lift punitive wine tariffs

China is this week expected to announce its final decision on whether to lift the crushing tariffs it slapped on Australian wine four years ago, but Australia’s Trade Minister is “cautiously confident” that the industry’s formerly number one export market will reopen.

Mar 26, 2024, updated Mar 26, 2024
Trade Minister Don Farrell addresses the Australian Grape & Wine event at Penfolds' Magill estate last weekend. Photo supplied.

Trade Minister Don Farrell addresses the Australian Grape & Wine event at Penfolds' Magill estate last weekend. Photo supplied.

SA Senator and Trade and Tourism Minister Don Farrell addressed Australian wine industry leaders on the weekend in Adelaide, ahead of an expected announcement from China about the tariffs on March 31.

Tariffs of more than 200 per cent were imposed on Australian wine in 2020 after China’s relationships soured with the former Morrison Government, resulting in the value of exports to China falling by $860 million.

South Australia was particularly hard hit, as the state produces about half of the total volume of premium wine made in Australia. In the year to June 2023, South Australian exports to China were worth just $4.9 million.

The Chinese Ministry of Commerce (MOFCOM) made an interim recommendation to wind back punitive tariffs earlier this month, and a final decision is expected from the body by the 31st of March.

Speaking to wine industry leaders including the CEO of Australian Grape & Wine Lee McLean and Treasury Wine Estates CEO Timothy Ford on Saturday, Farrell said it was “important that we get one step ahead of where we’re going to end up if – and I’m very hopeful – the Chinese government lifts the tariffs”.

“When we came to office almost two years ago we had almost $20 billion of trade impediments with China, across about 10 or 12 industries,” he said.

“We’ve managed to whittle that down to just wine and lobster – that’s $18 billion in trade. We managed to get $18 billion of trade back into China.”

He said it was clear that the “tariffs were unjustified”. However, unlike other industries that managed to move exports to other countries, “that wasn’t the case in the wine industry”.

“Wine was easily the worst of all of those industries affected. We used to sell in excess of $1.1 billion of wine to China each year, and that went basically to zero.

“But more particularly it negatively affected South Australia, because much of this wine was in the premium market and of course South Australia has 50 per cent of the total market, so you’ve had a much more negative impact in South Australia than anywhere else in the country.”

He said the relationship with China had now stabilised and he hoped the tariffs review would end on a positive note.

“Fingers crossed that will be a great decision,” he said.

It follows tariffs on Australian barley being lifted in August last year, and Farrell said in the months since Australia was “selling more barley into China than we were pre the tariffs”. He hoped the same would be possible for wine.

“There’s no reason why we can’t get back to where we were, or even better,” he said.

“I think we need to have a positive disposition about this, not a negative one.

“We’re cautiously confident…that we will resolve all of these issues.”

If the tariffs aren’t lifted, he said the Federal government had a World Trade Centre dispute to pursue.

“It will take longer than the process of dialogue and discussion, but we’re ready to go if that is the circumstance.”

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