In a significant diplomatic move, Prime Minister Anthony Albanese has embarked on a two-week journey to Beijing and Shanghai from November 4 to 7, marking the first visit by an Australian Prime Minister to China since Malcolm Turnbull’s trip in 2016. Prior to his departure, the Prime Minister unveiled a landmark agreement that paves the way for a five-month review to resolve the wine tariffs imposed by China on Australian wine exports.
This groundbreaking agreement carries the potential to bring an end to the last remaining trade sanction imposed by Beijing on Australian exports, encompassing commodities such as coal, barley, lobster, and red meat with an estimated value of $20 billion.
The Australian wine industry, in particular, has been significantly affected by tariffs reaching up to 220 per cent in 2020, with China asserting that Australian wine was being dumped in their market, undermining local producers. This tariff imposition had a profound impact on wine sales to China, amounting to approximately $1.2 billion annually.
The breakthrough concerning wine tariffs follows recent negotiations between Australia and China aimed at dismantling the strained trade relations that have been in limbo for years. China has gradually eased sanctions since Anthony Albanese assumed office as Prime Minister in 2022.
Prime Minister Albanese expressed his optimism about the trip, stating, “I look forward to visiting China, an important step towards ensuring a stable and productive relationship. I welcome the progress we have made to return Australian products, including Australian wine, to the Chinese market. Strong trade benefits both countries.”
China has been gradually rolling back trade sanctions that were unleashed in 2020, targeting $20 billion worth of exports, which they imposed in response to perceived grievances with the former Morrison government.
With the framework in place for the removal of wine tariffs, only informal bans on lobster and red meat exports from select abattoirs remain under Chinese sanctions. Prime Minister Albanese affirmed that Australia would persistently advocate for its interests, stating, “We will continue to put our case on matters that are in Australia’s national interest.”
China confirmed the consensus reached on resolving the issues pertaining to Australian wine, stating, “We are willing to work with Australia to continue to meet each other halfway through dialogue and consultation and jointly promote the stable and healthy development of bilateral economic and trade relations,” as per the Chinese Ministry of Commerce’s statement on Sunday.
In exchange for China’s commitment, Australia has agreed to suspend its World Trade Organization (WTO) challenge regarding the wine tariffs, pending the outcome of the review. If the tariffs are not lifted at the review’s conclusion, Australia will reinitiate the dispute within the WTO, with the Albanese government expressing confidence in its victory.
The WTO disputes panel recently submitted its findings to both countries, with a public release expected by the end of the month, adding pressure on China to conduct its own review and avoid a potentially unfavourable ruling.
This wine deal echoes a similar process that led to the removal of 80 per cent tariffs on Australian barley earlier this year, showcasing a positive shift in the trade dynamics between China and Australia.
Simon Birmingham, the Opposition foreign affairs spokesman and former trade minister when the wine tariffs were imposed, welcomed the review but called for immediate tariff removal. He highlighted that China’s actions followed the release of the WTO findings, denouncing the tariffs as an attempt at economic coercion.
The Australian Grape & Wine CEO, Lee McLean, expressed his enthusiasm for the recent announcement by the Prime Minister, stating, “This is another very positive step towards the removal of import duties on wine that would see the resumption of Australian wine exports to China.” He acknowledged the challenging times faced by Australia’s grape growers and wine producers due to the loss of China as a major trading partner, the global pandemic, and adverse weather events.
The Chinese Alcoholic Drinks Association was also engaged in discussions with Australian Grape & Wine President John Hart OAM and McLean during their visit to Shanghai. These discussions focused on shared objectives and significant opportunities for collaboration between the two industries in the future.
The positive dialogue at various levels between China and Australia’s political leaders, government officials, and industry representatives has played a pivotal role in reaching this decision. Australian Grape & Wine has actively collaborated with the Australian Government and the Department of Foreign Affairs and Trade in working toward a mutually beneficial solution that advances the interests of both nations. Regardless of the final outcome, the commitment to diversifying market presence and cultivating opportunities worldwide remains a priority for Australian wine producers.
NSW Wine Industry Association President Mr Mark Bourne welcomed the announcement; “This is an encouraging step forward that will hopefully lead to the removal of Chinese import duties on Australian wine.”
“Under the current circumstances, we are hopeful that the proposed approach is the best way for the Australian wine industry to achieve its desired result within the shortest time frame,” said Bourne.
Bourne further commented, “NSW Wine has been active in supporting engagement with China that reaches beyond just commerce. Particularly at an industry-to-industry level and in promoting collaboration in research, technology and sustainability which has all added to increasingly positive dialogue between Australia and China.”
Treasury Wine Estates Ltd (TWE) also welcomes today’s announcement from the Australian Government.
Commenting on the announcement, Treasury Wine Estates CEO Tim Ford said:
“It’s great news to see an agreement for a path forward to allow our Australian brands and wine to be sold in the Chinese market.
“There are only positives to come out of a favourable tariff review for the Chinese consumer, customers and wine category, for the Australian wine industry and for TWE.
“Both governments have worked constructively to achieve this outcome, and we now look forward to a new era of positive engagement that will ultimately build a strong and growing China wine category should the review see the removal of these tariffs.”