Beijing reviews wine tariffs ahead of Australian Prime Minister’s visit

Wine exports to China dropped from A$1.2 billion prior to the tariffs being imposed to only A$8 million in the year to date. Picture / 123RF

Beijing has launched a review of punitive tariffs that were placed on Australian wine in 2020 in the latest sign of thawing relations between the two countries ahead of Australian Prime Minister Anthony Albanese’s visit to China next month.

It is the first time an Australian leader has visited China in seven years and follows a period of tension between the two countries after former Prime Minister Scott Morrison publicly called for an inquiry into the origins of Covid-19 in 2020. The move triggered a backlash in China, with Beijing imposing a range of sanctions and tariffs on Australian products.

Albanese confirmed over the weekend he would visit China on November 4 for a three-day state visit, where he will meet Chinese President Xi Jinping and Premier Li Qiang. Since Albanese was elected in 2022, diplomatic tension between Australia and China has eased and trade restrictions between the two countries have been lifted.

Albanese said that China still accounts for almost a third of Australia’s trade and he welcomed the expedited review of the tariffs on wine, which is expected to take around five months. The two countries have suspended a dispute lodged with the World Trade Organisation over the issue.

“I welcome the progress we have made to return Australian products, including Australian wine, to the Chinese market. Strong trade benefits both countries,” Albanese said.

Australian exports including coal and barley were easily routed to different markets, but the wine industry — hit with tariffs of up to 175 per cent — struggled to cope.

Wine exports to China dropped from A$1.2 billion prior to the tariffs being imposed to only A$8 million in the year to date, according to the Australian Grape and Wine trade body.

Ahead of the state visit, China released Australian journalist Cheng Lei from detention earlier in October. Last week, Albanese’s Labour Government opted against revoking a lease held by a Chinese company on the northern port of Darwin after a national security review.

Australia is also set to remove anti-dumping measures on the import of Chinese wind turbines, which has been welcomed by Beijing as a step towards bilateral co-operation.

A resumption of bulk exports to China would provide some relief to Australia’s red wine industry, which has struggled with overcapacity in the past year. Rabobank has estimated that there are over 2b litres of wine, or 2.8b bottles, in storage in Australia.

Tim Ford, chief executive of Treasury Wine Estates, Australia’s largest wine producer, said the tariff review was “great news” and the industry would look forward to a “new era” as talks progress.

“There are only positives to come out of a favourable tariff review for the Chinese consumer, customers and wine category, for the Australian wine industry and for TWE,” he said.

Written by: Nic Fildes and Ed White.

© Financial Times