China moves to dump crippling tariffs on Australian wine

China has recommended dropping punitive tariffs imposed on Australian wine exports four years ago, in an interim decision worth $1 billion.

Mar 13, 2024, updated Mar 13, 2024
Treasury Wine Estates is preparing to relaunch its flagship Penfolds brand in China if punitive tariffs are lifted. Photo: TWE

Treasury Wine Estates is preparing to relaunch its flagship Penfolds brand in China if punitive tariffs are lifted. Photo: TWE

Beijing is reviewing the sanctions through a five-month process after the Albanese government agreed to suspend Australia’s dispute lodged with the World Trade Organisation until March 31.

The Chinese government late on Tuesday released its interim recommendation that the duties on wine are no longer necessary.

Punitive tariffs of more than 200 per cent were slapped on Australian wines in 2020 as China’s relations soured with the former Morrison Government.

The sudden move destroyed Australia’s biggest wine export market overnight and inflicted huge economic damage on the industry.

China – previously Australia’s top wine export market – dropped to 14th spot within a year, with total exports dropping by 30 per cent or $860 million and leaving winemakers scrambling to find new markets.

The volume of wine sent overseas fell by 17 per cent to 619 million litres in 2021, the lowest volume shipped in a 12-month period since the year ended September 2004.

South Australia’s wine exports to China evaporated by $88 million and in the year to June 2023 were worth only $4.9 million.

The total value of Australian wine exports fell by 2 per cent in the 12 months to 31 December 2023, falling below $2 billion for the second year in a row.

Beijing will announce its final decision later this month, but the move has sparked hope the tariffs will be fully removed.

Foreign Minister Penny Wong said the government had stabilised the relationship with China without compromising the nation’s values.

“We have delivered on that commitment through calm and consistent dialogue,” she said.

“We continue to press for all remaining trade impediments to be removed.”

Trade Minister Don Farrell, who has met his Chinese counterpart numerous times in the past year, said the interim recommendation was a welcome development.

“It vindicates the government’s preferred approach of resolving trade issues through dialogue rather than disputation,” he said.

Australian Grape & Wine chief executive Lee McLean said the decision was a “positive step” towards resuming trade with what was formerly the largest export market.

“We remain cautiously optimistic about the forthcoming decision and will await MOFCOM’s (China’s commerce ministry) final determination,” he said.

“We appreciate the collaborative efforts from both the Australian and Chinese governments, and industry partners, in working towards a resolution.”

China’s Ambassador to Australia Xiao Qian on Monday said the review was “moving on the right track, in the right direction”.

The state government said that it welcomed the announcement as a positive stop in reinstating the strong trading relationship between South Australian wine exporters and China.

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