Wine win as China reveals tariff interim decision

China has released an interim decision on whether to remove crippling wine tariffs that have crushed a $1.1bn export market. So will it be sour grapes for SA wine makers?

Australia’s $1bn wine exports to China are poised to be revived after the Communist nation issued an interim recommendation to abolish crippling tariffs on bottled wine.

Hailed as a billion-dollar boost to the hard-hit industry, the recommendation released on Tuesday night stated that duties on Australian wine were no longer necessary.

The interim decision comes ahead of a final ruling expected before the end of March, allowing governments, winemakers and other affected parties to further campaign and submit comments.

China was Australia’s largest wine export market – valued at $1.1bn at its 2019 peak – before the tariffs were imposed in 2020.

It also was South Australia’s largest market, valued at $946.5m in October, 2020, and accounting for 47.2 per cent of the state’s wine exports.

Australian and China agreed to suspend the wine dispute in October, 2023.

But the tariffs shattered that market, plunging SA Chinese wine exports to the year ending November 2023, to a value of just $2.7m.

Trade Minister Don Farrell said the interim recommendation to remove tariffs on Australian wine was “a welcome development”.

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

Foreign Affairs Minister Penny Wong vowed to continue to “press for all remaining trade impediments to be removed”, saying the interim decision delivered on a commitment to stabilise the relationship with China “without compromising on what is important to Australians”.

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

Foreign Affairs Minister Penny Wong said the interim decision didn’t compromise “what is important to Australians”. Picture: Asanka Ratnayake/Getty Images

SA Premier Peter Malinauskas said he hoped the interim ruling was an indicator of the final decision, citing the almost billion-dollar plunge in SA wine exports to China.

“So this is a billion-dollar decision for our wine industry. That’s money not just in the pockets of wineries, it’s also growers, their employees, countless suppliers – whole communities in the Riverland, Barossa, McLaren Vale, Coonawarra, Clare Valley, the Limestone Coast and so on,” he said.

“A lot of people are breathing a sigh of relief tonight. But we’ve still got a little bit of time to go.”

Australia and China in late October agreed to “suspend the dispute on wine” after Beijing fast-tracked the 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.

The federal government has continued to make it clear that if the punitive duties were not removed by March 31, Australia would resume its WTO dispute and remains confident of the outcome.

Prime Minister Anthony Albanese in October said “we’re confident of a successful outcome” amid expectations wines free of tariffs by mid-2024 and greater efforts to “stabilise our relationship with China”.

Treasury Wine Estates CEO Tim Ford at the St Huberts estate in the Yarra Valley. Picture: Aaron Francis/The Australian

Treasury Wine Estates chief executive Tim Ford has said the company has a plan to re-enter the market with wines from Australia if the tariffs were dropped, but the company has been awaiting further progress.

The Chinese duties effectively blocked all wine trade and numerous producers were unable to find alternative markets.

Mr Farrell has consistently urged the removal of all outstanding export barriers, including at a February meeting with the Chinese commerce minister at an Abu Dhabi WTO ministerial conference.

After leading a South Australian trade delegation to China last September, Mr Malinauskas said he was confident the business group had made positive inroads into dismantling tariffs on wine and other key exports.

Mr Malinauskas appeared on state-run Beijing news channel CGTN, which the delegation interpreted as a positive sign of Chinese government intent on tariffs, arguing for a stabilisation of the Australia-China relationship.

Mr Ford, who was among the SA delegation, at the time said it had been “very impactful” and sent a clear message to Chinese authorities that business and government were co-operating to “unlock the significant opportunities ahead across multiple industries and sectors.”