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China Lifts Heavy Tariffs on Australian Wine

In a significant move that could reshape trade dynamics, China has announced it will lift anti-dumping and anti-subsidy tariffs on Australian wine starting March 29, 2024. This marks the end of three years of hefty levies that greatly impacted Australian wine producers.

The tariffs, which went as high as 218.4%, were initially imposed in March 2021 for five years, coupled with other trade barriers on Australian goods. This move came in response to Canberra’s call for a probe into the origins of COVID-19 which strained relations between the two countries.

A Gleaming Sign for Trade Relations

This announcement is a welcomed development as it signals an improvement in Canberra-Beijing ties. Notably, China has been gradually easing trade hurdles on Australian products, ranging from barley to coal, in recent months. This has led to a renewed sense of optimism that other punitive tariffs, particularly those impacting Australia’s leading wine export market, may soon follow.

Australia’s top publicly listed winemaker, Treasury Wine Estates (TWE.AX), has also expressed its positive sentiments, stating that the lifting of the tariffs is a significant boost not only for the company but also for the overall Australian wine industry and Chinese wine consumers. It has plans to collaborate with Chinese customers to boost sales, marketing, and brand management.

From Zero Tariffs to Trade Woes

In the backdrop of a free trade agreement in 2015, Australian wines enjoyed a distinctive 14% tariff advantage over various other wine-producing countries, with zero tariffs on imports into China. Consequently, in 2020 before the duties were enforced, Australian wine constituted a significant 27.46% of Chinese wine imports. However, in the first half of 2023, this plummeted to just 0.14%.

According to the Australian Government, since the imposition of tariffs in 2020, Australian wine exports to China were rendered almost unviable. Estimated figures suggest that the said exports were worth $1.1 billion in 2019.

The Path to Resolution

Canberra had earlier appealed to the World Trade Organisation (WTO) against Beijing’s tariffs on Australian products levied in 2020. However, with the lifting of the wine tariffs, Australia will discontinue its legal proceedings at the WTO. This was possible due to a consensus reached between China and Australia on the resolution of disputes under the WTO framework. Beijing-based Australian CEO of wine importer and distributor The Wine Republic, Campbell Thompson, described the recent development as “great news.”

As a part of the trade diversification strategy, the Australian Government is pressing for the removal of the remaining trade impediments influencing Australian exports. This is considered to be in mutual interest with China. Undoubtedly, the lifting of tariffs will be celebrated by vine growers in Australia, allowing them to manage over-production and cater to waning global wine consumption.

Sources: ABC, Minister for Trade and Tourism, Reuters

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