China has proposed removing steep tariffs of more than 200% on Australian wine, according to the country's top listed winemaker, signalling the end could be near to a three-year trade dispute as both countries seek to improve ties.
Treasury Wine Estates made reference to China’s plan in a stock exchange filing on Tuesday, adding that the final decision would be made in the “coming weeks”. The Ministry of Commerce in Beijing did not respond to a question about when it would announce its decision.
“The interim recommendation to remove tariffs on Australian wine is a welcome development,” Australian Trade Minister Don Farrell said in a statement.
“It vindicates the government’s preferred approach of resolving trade issues through dialogue rather than disputation,” he added.
In a separate statement, Foreign Minister Penny Wong pledged to continue to push “for all remaining trade impediments to be removed”.
Removing the import taxes would help revive a billion-dollar Australian market and put an end to Beijing’s years-long campaign of punitive trade actions to try to influence policy in Canberra.
Before tariffs of up to 218% were imposed on Australian wine in March 2021, China was Australia’s largest market for vintners, accounting for A$1.1 billion (US$728 million) in revenue in 2019.
“This is a positive step towards resuming trade with what was formerly our largest export market,” said Lee McLean, chief executive of Australian Grape & Wine Inc, adding that the industry remains hopeful about Beijing’s proposed removal of the tariffs.
“We are optimistic yet cautious with this news as there is a very large job for Australian winemakers to re-invigorate this market after three years of being out of it. Australian winemakers will have to rebuild our trust in the Chinese market,” said Mitchell Taylor, a third-generation winemaker with Taylors Wines.
Despite the challenge, Taylor said this is a “big win” for the industry which has been under enormous pressure amid changing economic circumstances.
Reuters reported last week that millions of vines are being destroyed in Australia and tens of millions more must be pulled up to rein in overproduction that has crushed grape prices and threatens the livelihoods of growers and wine makers.
Falling consumption of wine worldwide has hit Australia particularly hard as demand shrinks fastest for the cheaper reds that are its biggest product, and in China, the market it has relied on for growth until recent years.
With the lifting of the wine tariffs now highly likely, China is seen to be on the brink of ending its trade campaign against Australia, as the interim plan reported on Tuesday becomes the latest in a series of positive developments.
Xiao Qian, China’s ambassador to Australia, said this week that “things are moving on right tracks with the right direction” on the wine tariff review.
The wine tariffs were part of a series of trade curbs to punish Canberra for actions including calls by then-Prime Minister Scott Morrison for an international investigation into the origins of Covid-19. Australia withstood the backlash from its largest trading partner, even as the specific industries targeted were hurt.
Australia managed to ride out the trade tensions with effectively no public concessions to Beijing, raising questions about the effectiveness of China’s effort.
Another wine exporter in Australia said that it would take time for trade to return to normal.
“Before the trading issue, we exported 150 cases of wine a year,” said Alex Xu, a director of Royal Star Wine Co. “Now we only export 10 containers to other countries like Vietnam, Cambodia and India. But these markets aren’t as profitable as the Chinese market.”