'No longer necessary', China drops tariffs on Australian wine after three years of economic coercion
Producers welcomed putting Australian wine back on Chinese dining tables but said they would be focussing on diversifying their exports and selling more at home.
Beijing has lifted retaliatory duties worth over 200 per cent that it imposed on Australian wine after former prime minister Scott Morrison called for an inquiry into the origins of Covid.
The wine industry’s annual value fell by around $1 billion as a result of the economic coercion which lasted more than three years.
The reprieve had been long expected after China last year agreed to ‘review’ the tariffs if Australia paused its legal dispute against Beijing in the World Trade Organisation.
China, which refused to communicate with the former Coalition government re-established high-level visits with Labor, including President Xi Jinping welcoming Prime Minister Anthony Albanese to Beijing last year.
As a result of those visits, Australia was confident a breakthrough would come in March which it said was proof of their success in stabilising the bilateral relationship.
The result came on Thursday evening from China’s Ministry of Commerce.
‘As the situation of China's wine market has changed, the anti-dumping and anti-subsidy measures imposed on Australian wine are no longer necessary,’ the Ministry said in an online statement, cited by state media.
Albanese, Foreign Minister Penny Wong and Trade Minister Don Farrell said in a statement that the duties would be lifted on Friday, 29 March.
‘We welcome this outcome, which comes at a critical time for the Australian wine industry,’ they said.
‘The Australian Government's approach is to cooperate with China where we can, disagree where we must and engage in our national interest – the outcomes on barley and wine reflect that approach.
’We will continue to press for all remaining trade impediments affecting Australian exports to be removed, which is in the interests of both Australia and China.’
The government insisted that trade diversification was a ‘key element’ of the government’s strategy.
Australia will now discontinue the legal proceedings started by the former government in the WTO just as it did with the dispute over barley.
China had imposed 80 per cent tariffs on the grain and ended those last year.
While Australian grain growers were able to find other markets, for winemakers, China’s economic coercion took an immediate and devastating toll.
Between 2017 and 2021 China was the country that purchased the most Australian wine but in 2022 fell off the top ten list of overseas customers as a result of the enormous duties.
In the 12 months ending September 2020, the value of Australia’s wine exports to China was $1.2 billion. For the same period of time ending last September that figure shrivelled to a paltry $7 million.
While some wine producers managed to grow their exports to AUKUS allies - the United States and the UK - the industry could not recover the total losses incurred by the Australian government of the day provoking China’s wrath.
The total value of Australia’s wine exports was $1.8 billion in the 12 months to September 2023. By contrast, sales in 2019 reached a record high valued at $2.9 billion.
Lee McLean from Australian Grape & Wine attributed the positive outcome to the government’s diplomatic efforts.
‘We are working closely with the Australian Government and Wine Australia to ensure a coordinated approach is taken to re-entry and that the sector is well positioned to re-establish trade relationships,’ he said.
‘We look forward to seeing Australian wine back on Chinese dining tables and rejuvenating our relationship with customers and business partners in that market.'
‘We will also, however, be maintaining our focus on diversifying our export footprint and growing demand here in Australia as well.’
The opposition’s trade spokesman Kevin Hogan said the positive outcome was the result of the former government disputing China’s economic coercion in the WTO.
‘The Coalition engaged the WTO Dispute Settlement Body to establish a panel to review the matter, which has led to this result,’ Hogan said.
‘This is great news for the Australian wine industry which has genuinely suffered since the tariffs were enforced.’
Hogan added that the move was a further departure from China’s ‘Wolf Warrior’ diplomacy.
Though the UK is not a wine producer, I wonder if UK farmers are not beneficiaries of Australia increasing its agricultural exports to China & other Asian markets through less competition. Might disappoint Rees-Mogg and his claims for cheaper post Brexit food for UK families through accessing non EU producers. But currently in UK where decline seems continuing. Had misfortune of a side trip to Manchester Airport with long distances between terminals made worse by broken travellator s - which were also broken 18 months ago. Compare this to Singapore, Seoul or Bangkok. At Bangkok their new less distant terminal has a driverless train covering shorter distances than Manchester just like Singapore. One wonders what impression Manchester Airport gives visitors to Northern Britain.