Australian wine producers with tanks and warehouses full of unsold stock and hopes that China would lift its punishing 212% sanctions on their wine, are feeling a little more optimistic. Last week brought news that negotiations between the two countries had led to a removal of the 80.5% tariff on Australian barley. Before the introduction of the sanction in May 2020, Australia had supplied around 40% of the Asian giant’s imports of this crop. Over the last three years, Canada has largely taken its place.
Relief for the wine industry is unlikely to be immediate, but Australia’s trade minister Don Farrell stated that “We intend to use [the barley negotiation] process as a template for resolving the issue in respect of wine, which is still ongoing.”
Australia has dropped its World Trade Organisation challenge against the barley tariffs but it continues to pursue its parallel WTO action on wine. Penny Wong, Australia’s foreign affairs minister said she was “confident of [Australia’s] case”.
Even if/when the sanctions on wine, lobsters and red meat are lifted, Australian exporters are aware that they will need to work very hard to regain a dominant place in the market that has been taken by other countries.
They also know that the overall Chinese wine market has shrunk dramatically since its pre-sanctions heyday. Between 2021 and 2022, according to China’s National Bureau of Statistics, domestic production and imports both fell by over 21%.