China’s government has taken a decisive step by removing the heavy tariffs previously imposed on Australian wine, marking a significant shift in the trade dynamics between the two nations. This move is poised to breathe new life into the Australian wine industry, which has faced challenges due to low prices and a global oversupply.
The decision to reconsider the tariffs came five months ago, amidst efforts to dismantle trade barriers that affected approximately $20 billion of Australian exports during 2020 and 2021. This period represented a low point in the bilateral relationship between China and Australia. The Commerce Ministry of China, earlier this month, indicated through an interim decision that the punitive tariffs, which were as high as 220 percent, would be abolished.
On Thursday, the Commerce Ministry in Beijing declared it unnecessary to continue imposing anti-dumping and countervailing duties on imports of relevant Australian wines. This announcement was eagerly anticipated by the industry, following hints from Australian vintners and lawmakers that China was leaning towards lifting the import restrictions.
The removal of these tariffs signals the end of a three-year period of trade tensions between Beijing and Canberra. It also raises hopes for the rejuvenation of the billion-dollar wine industry, which has suffered significantly under the weight of these trade measures.
In October 2020, just before the tariffs were introduced, China stood as South Australia’s largest wine export destination, representing 47.2 percent of the state’s global wine exports with a value of $946.5 million. The SA industry includes 3,250 grape growers and 680 wineries. However, the landscape drastically changed in November 2020 when China imposed interim anti-dumping and countervailing duties, which were solidified in March 2021 with import duties reaching up to 218%. The impact was immediate and severe, with wine exports to China plummeting to a mere $2.8 million and a volume of 1.05 million litres by the year ending January 2024.
The announcement to remove all trade barriers comes after persistent efforts by both State and Federal Governments to mend the trading relationship with China. A recent visit to China by South Australia’s Premier, accompanied by a delegation of food, wine, and agribusiness CEOs, including Richard Dolan from Bec Hardy Wines, showcased the strong interest from Chinese importers and the industry in re-engaging with South Australian wine exporters. This interest was further highlighted during the Taste of South Australia events in China, which were attended by Minister for Primary Industries Clare Scriven.
High-level diplomatic efforts have also been instrumental in reaching this outcome, with Prime Minister Anthony Albanese meeting President Xi Jinping, and both Foreign Affairs Minister Penny Wong and Federal Trade and Tourism Minister Don Farrell advocating for Australian producers in Beijing.
In anticipation of the tariff removal, the Government conducted China Market Insights Workshops for nearly 200 South Australian wine industry businesses, covering key wine-producing regions such as Coonawarra, Barossa, Riverland, and the Adelaide Hills. These workshops, held in late January and early February, were designed to prepare businesses for re-entry into the Chinese market.
The lifting of tariffs is a culmination of significant progress at both the state and federal levels towards stabilizing relations with China, which has seen the removal of trade impediments on a variety of Australian products since May of the previous year, including coal, cotton, timber, barley, and oaten hay.
Premier Peter Malinauskas expressed his enthusiasm for the development, stating, “This an exciting day for South Australia and in particular the communities in our world-famous wine producing regions.” He highlighted the profound impact of the Chinese Government’s decision on thousands of South Australians whose lives and livelihoods have been adversely affected in recent years. The Premier’s visit to China in September, the first by a South Australian Premier since 2019, underscored the continued demand in the Chinese market for high-quality South Australian wine.
“This is a decision which has the potential to deliver benefits for people of both nations,” Malinauskas added, emphasizing the concerted efforts at both state and federal levels to advocate for the removal of trade barriers. With the tariffs now lifted, there is rising excitement within the local wine industry about the opportunities to restore and expand export relationships with China, South Australia’s largest trading partner.
