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China lifts penalties on Australian wine after more than three devastating years




Source: https://lite.cnn.com/2024/03/28/china/china-lifts-australia-wine-tariffs-intl-hnk/index.html


By Simone McCarthy, CNN


Updated: 3:33 AM EDT, Thu March 28, 2024


Source: CNN


China has announced it is lifting punishing tariffs on Australian wines more than three years after imposing penalties that devastated the industry and were a major point of friction between the trading partners.


China’s Ministry of Commerce on Thursday said that “in view of the changes in the wine market conditions in China,” it was “no longer necessary to impose anti-dumping duties and countervailing duties on imported wines originating from Australia.”


The measure would come into effect on Friday, two days before the end of a five-month review period agreed on by Canberra and Beijing that saw Australia suspend a dispute on the issue at the World Trade Organization for that period.


The decision scraps duties as high as 218% on Australian wine exports to China, its largest overseas market once worth more than 1 billion Australian dollars ($653 million).


The Australian government said it welcomed Beijing’s decision “which comes at a critical time for the Australian wine industry.”


“Since 2020, China’s duties on Australian wine effectively made it unviable for Australian producers to export bottled wine to that market,” the statement read. “We acknowledge and thank Australian grape growers and wine producers for their fortitude and support during a challenging period.”


The wine tariffs were part of a raft of trade curbs Beijing slapped on key Australian exports starting in 2020 as punishment for political grievances.


Their removal comes amid a thaw in China-Australia relations that’s seen Chinese authorities steadily roll back a number of those barriers including on barley, timber, and coal.


“The Australian Government’s approach is to cooperate with China where we can, disagree where we must and engage in our national interest,” the Australian government said it its Thursday statement.


Beijing’s move will be embraced by the country’s hard-hit winemakers, who have been grappling with oversupply amid flagging broader global demand on top of years of major revenue losses from China.


The removal of the wine tariffs was widely expected after Beijing earlier this month notified the Australian government of an interim decision to remove the duties.


Tariffs of up to 212% were originally introduced by China’s Ministry of Commerce in November 2020. A final ruling the following March set between 116% to 218% antidumping and countervailing duties for a five-year period.


The wine duties were a sharp hit for the key Australian industry, with sales to China down 97% in 2021 from the previous year at a loss of nearly $1 billion in value and 90 million liters in volume, according to national industry group Wine Australia.


Global exports also dropped by 30% in value during that period.


Annual wine production hit its lowest point in more than 15 years during 2022-2023, Wine Australia said. The same year, the United Kingdom and the US became the country’s most valuable export markets.


Diplomatic thaw


China imposed the wine tariffs and other trade controls amid a souring of relations between the two countries over issues of national security and foreign investment, which deteriorated further in 2020 following Canberra’s call for an international inquiry into the origins of the Covid-19 pandemic in China.


China’s Foreign Ministry had blamed Australia for the trade issues, in 2020 accusing it of “violating the basic norms governing international relations,” though its commerce ministry has cited anti-dumping and other reasons for the raft of curbs.


Relations began to improve after the election of Anthony Albanese’s Labor government in May 2022 allowed for a reset of relations, but the wine tariffs had remained a sore point.


The wait for China’s final decision on its tariff review hung over a visit to Canberra earlier this month by Chinese Foreign Minister Wang Yi.


Wang meet with both counterpart Penny Wong and Australian Prime Minister Anthony Albanese in what was the first visit from China’s top diplomat to the country in seven years.


Australian Foreign Minister Wong at the time stressed she was looking forward to the final decision on the wine tariffs, while raising Canberra’s desire for the removal of remaining curbs on beef and lobster.


She also discussed other pain points during talks with Wang, including China’s sentencing to death last month of imprisoned writer and democracy activist Yang Hengjun, an Australian citizen detained in China since 2019.


The visit followed a trip to China from Albanese last November, making him the first Australian leader to visit in seven years.


The removal of trade curbs without major concessions from Australia has widely been embraced within the country as a win against China’s coercive measures, observers say.


Earlier this month, Albanese looked forward to the lifting of the duties, saying it would mean “more jobs for people throughout regional Australia.”


He also predicted on Thursday that their removal would see the Australian wine industry bounce back even stronger.


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