Australia Breathes a Sigh of Relief as Trade Dispute With China Reviewed

Australia and China have suspended their World Trade Organization wine tariff dispute. China wants to take five months to review the punitive tariffs imposed on wine imports from Australia. In return, Australia will suspend its complaint to the WTO.

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Are China and Australia getting closer again? (Photo: nerthuz/
Are China and Australia getting closer again? (Photo: nerthuz/

Australia’s Prime Minister Anthony Albanese is optimistic that the review could lead to an abolition of the p tariffs, as has already happened at the beginning of 2023 with the tariffs imposed on Australian barley.

Up to 218% on Australian wines

China had imposed the tariffs in November 2020; the official reason was to protect the market from dumping practices. On the Australian side, however, it was suspected that the duties were related to Australia's demands for investigations into the origin of the Corona pandemic. The tariffs were increased to 218% in March 2021 and were scheduled to last for five years. 

China was Australia’s most important wine market at that time. After the introduction of the tariffs, the value of Australian wine exports to China fell by more than 50% year-on-year in November 2020 and was virtually zero by December. Although some of the export shortfall was made up in other markets such as Europe, red wine stocks in Australia's wine warehouses grew dramatically and bulk wine prices plummeted.

Statements issued by the Australian government — just ahead of Albanese's planned visit to China's leader Xi Jinping in November — now offer hope for the glutted wine market. However, in view of the sharp decline in China’s consumption, a quick recovery should not be expected.

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Giving hope to the wine industry

The producers' association Australian Grape & Wine (AGW) released a statement saying how pleased they were about the development. The announced review on the part of China is a “further very positive step towards the abolition of import duties on wine, which would allow the resumption of Australian wine exports to China,” according to the CEO of AGW, Lee MacLean. “Australian Grape & Wine will engage in the review process and support it in every way possible.”

MacLean and John Hart, Chairman of the AGW, were in Shanghai in mid-October to meet with the Chinese Alcoholic Beverages Association, to discuss common goals and opportunities for future collaboration, it said.

Wine giant Treasury Wine Estates (TWE) is also in good spirits. As the company announced in a press release, it sees itself as well positioned to rebuild its business in China if the tariffs should indeed fall at the end of the review process. In this case, the company says it will sustainably expand its China business, but without neglecting long-term growth opportunities in other key markets. CEO Tim Ford spoke of a “new era of positive engagement” and emphasised that an end to the punitive tariffs would be good for Chinese consumers, the Australian wine industry and TWE itself. VM

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