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China Lifts Punitive Tariffs on Australian Wine Amid Diplomatic Thaw

China has agreed to eliminate punitive tariffs on Australian wine, signaling a positive turn in diplomatic relations between Beijing and Canberra.

Australian Prime Minister Anthony Albanese announced that China’s 218% tariffs on Australian wine would end on Friday, March 29.

"We welcome this outcome, which comes at a critical time for the Australian wine industry," stated the Australian government. "The re-entry of Australian bottled wine into the Chinese market will benefit both Australian producers and Chinese consumers."

In 2020, China was the largest market for Australian wine, accounting for 40% of the country’s exports. However, following a diplomatic dispute, China imposed punitive tariffs on Australian wine and other goods such as barley, timber, coal, and cotton. The tension escalated after Australia excluded Chinese firm Huawei from its next-gen phone network rollout and called for an international inquiry into the origins of the Covid-19 pandemic in Wuhan, prompting severe retaliatory measures from China.

By the end of 2021, Australian wine exports to China had plummeted by 97%, leading to the closure of Wine Australia’s Shanghai office. The Australian government stated that the tariffs had made it "unviable for Australian producers to export bottled wine to that market." However, diplomatic relations have improved in recent months.

In October 2023, Australia suspended its World Trade Organization complaint about the wine tariffs, following positive discussions between Albanese and Chinese President Xi Jinping. The Chinese Ministry of Commerce has now agreed to lift the heavy tariffs on Australian wine.

"This outcome affirms the calm and consistent approach taken by the Labor Government and follows the success of the similar approach taken to remove duties on Australian barley," said Albanese, Foreign Minister Penny Wong, and Trade Minister Don Farrell in a joint statement. "We acknowledge and thank Australian grape growers and wine producers for their fortitude and support during a challenging period."

The past few years have been particularly tough for Australian wine producers, with exports also declining in key markets like the USA and the UK due to inflationary pressures. Growers have had to destroy millions of vines to address an oversupply crisis. The removal of the tariffs offers a rare piece of good news, prompting celebration among winemakers.

Tim Ford, CEO of Treasury Wine Estates, commented, "The removal of tariffs on Australian wine exports to China is terrific news and is cause for celebration across the Australian wine industry and with our partners and consumers in China. We’re thankful to the governments in Australia and China for working tirelessly to stabilize relations between both countries. This announcement signals the start of our ramp-up to re-establish our Australian luxury and premium wine distribution in China, and it shouldn’t be too long before local Chinese consumers have more access to our great wines."

Robert Foye, CEO at Accolade Wines, expressed optimism about the long-term potential of the Chinese market, stating, "We do not anticipate an immediate return to 2020 trading levels, but we are excited about the long-term potential this market brings."

 

Source: Decanter

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