China agrees to review wine tariffs, in win for SA producers, ahead of Beijing trip by Prime Minister
South Australian winemakers may regain sales to China’s lucrative export market within months amid hope costly import taxes could be dropped early next year.
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South Australian winemakers may regain sales to China’s lucrative export market within months amid hope costly import taxes could be dropped early next year.
In a significant development, Prime Minister Anthony Albanese revealed on Sunday a crucial diplomatic breakthrough on the row over crippling wine tariffs ahead of a landmark China visit in a fortnight.
Amid mounting hope for an end to a bitter trade row, he said Australia and China had late on Saturday night agreed to “suspend the dispute on wine” after Beijing fast-tracked a five-month review of import duties.
Canberra, in exchange, suspended its formal complaint to the World Trade Organisation, after tariffs of up to 220 per cent on Australian wine were imposed in 2020.
Authorities say if the “punitive” duties are not then removed, Australia will resume its WTO dispute.
But Mr Albanese said “we’re confident of a successful outcome” amid expectations wines free of tariffs by mid-next year and greater efforts to “stabilise our relationship with China”.
He denied the development was “transactional” or helping China avoid a potentially embarassing WTO ruling although observers believe it is a face-saving exercise for the Chinese.
Both countries received a draft WTO report on the dispute in recent days amid reports it was favourable to Australia.
Speaking ahead of his US state visit to Washington DC, he welcomed China’s “expedited review of its duties” as he said “strong trade benefits both countries”.
He said: “This is a very significant decision, because unlike some of the other products, the wine industry have indicated they were having difficulty finding other markets to fill the gap that was created by the breakdown in the trade with China. So, this is critical.
“We’ll continue to put our case, on matters that are in Australia’s national interest.
“I’ve said very consistently, we’ll cooperate with China where we can, we’ll disagree where we must, and we’ll engage in our national interests and that’s precisely what we’re doing.
“It’s in Australia’s interest to have good relations with China.”
Last week, he said he was “very hopeful of a breakthrough” as he spoke of being at a Singapore dinner in June with the US, British and Chinese defence ministers.
“The wine industry does have substantial, had substantial exports to China,” he said. “And it’s an important part of that industry is export.
“It’s a pretty good product for China to receive. This is a win-win.”
In an Eyre Peninsula speech earlier this month he said it was “in the best interests of Australian businesses to sell to this market and it’s in the best interests of China to have access to the best quality products in the world, like Port Lincoln seafood”.
Industry leaders hope it will restore a lucrative market that has plummeted in value since the restrictions were imposed as retaliation against former prime minister Scott Morrison’s call for an inquiry into the Chinese origins of Covid-19.
Premier Peter Malinauskas, who last month had frank talks with during his visit to China, hailed the “game-changing” breakthrough.
“We need those tariffs to be lifted so we can have South Australian wine producers... exporting to one of the largest markets anywhere in the world,” he said.
“The difficulties that the Australia-China relationship has gone through in recent years has had a real-world impact on thousands of South Australian families.
“I’ve spoken to grape growers in the well-known regions like the Barossa (Valley), McLaren (Vale), Clare Valley, but also critically in our Riverland, who have lost so much of their income, so much of their wealth, because of the punitive of Chinese tariffs.
“We keenly anticipate the outcome of that review so that again South Australian wine producers can export their high-quality products to one of the largest markets anywhere in the world.”
China, who is Australia’s largest trading partner, scrapped its tariffs on Australian barley earlier this year after the Chinese government agreed to review its 80.5 per cent tariff.
The wine tariffs were introduced amid worsening relations between China and the former Coalition government.
Australian alcohol exports to China plunged to just $37m last year, compared with $1.2bn in 2019.
The two-way trade between the two countries was estimated to be worth $287bn last year and is almost a third of Australia’s total export business.
Until 2020, wine was SA’s largest goods export worth $1.9 billion to the state’s economy with China the biggest customer, quaffing $975m worth a plonk.
SA’s wine exports have dramatically shrunk to $3.4m in August.
Senior government officials have been working to remove blocks on other produce including seafood such as lobster, timber and coal.
SA Wine Industry Association chief executive, Inca Lee – who was part of the Premier’s China trade delegation – said Chinese consumers traditionally enjoyed SA reds but palates were changing so winemakers would have to diversify.
She said the industry was hopeful about regaining access to the lucrative market.
“It’s a very important step, we’re measured, we’re very considered but we welcome it absolutely,” she said.
“We recognise there’s been a lot of discussions to rebuild relationships between the two countries. We know the China market was changing just before Covid hit.”
Taylors Wines operations manager, Clinton Taylor, said his Clare Valley production would be boosted, especially for premium shiraz and cabernet sauvignon drops.
“We would look to get back into China as it’s a great opportunity for us to showcase our premium wines,” he said.
“The tariffs stopped the industry trading with China.”
Treasury Wine Estates chief executive Tim Ford, whose company produces brands including Penfolds, added: “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.”
Treasurer Jim Chalmers said the goverment “enthusiastically” endorsed China’s decision, adding: “These restrictions should never have been put on place in the first place.”
SA Liberal Senator Simon Birmingham, a former Trade Minister, said he welcomed the development but criticised China’s “economic coercion”.
“The tariffs were never justified,” he said.
“It’s no coincidence that China and Australia received the draft report from the World Trade Organisation into Australia’s appeal against the tariffs only in the last week.
“By negotiating this review deal at the last minute China is avoiding the embarrassment of having its breaches and coercion called out publicly by the independent international umpire.
“China shouldn’t make Australian winemakers wear this unjustified pain through a further five month review, when instead they should simply remove their unjustified tariffs immediately.”
After returning from Washington, Mr Albanese will travel to China in a fortnight where he will meet President Xi Jinping in Beijing and Premier Li Qiang while also visiting China International Import Expo in Shanghai.
During the Prime Minister’s visit, which has been mired in controversy, the leaders will discuss “co-operation in a range of areas including economic links, climate change and links between our people”, officials say.
Earlier this month, Australian journalist Cheng Lei was released from a Chinese jail.
Last week, authorities said a 99-year lease on the Port of Darwin held by a Chinese company will not be scrapped after a federal government review found it was “not necessary”.
It is the first Prime Ministerial visit to China since 2016 and comes 50 years since former leader Gough Whitlam’s trip in 1973.
The PM said he was looking forward to “further engaging with President Xi and Premier Li in Australia’s national interest”.
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