China nods toward a tariff lift in “interim” decision, industry leaders remain cautious

Australian wine on sale in Shenzhen, China, prior to the imposition of the tariffs. Photo: Camellia Aebischer

The Chinese Ministry of Commerce (MOFCOM) has released an “interim decision” during its review of tariffs on Australian wine, with the draft outcome proposing a removal of the duties. As the Australian wine industry holds its breath until the end of March, industry leaders say they are optimistic yet remaining cautious.

Treasury Wine Estates (TWE) revealed last night that it had been advised of the interim draft determination, which outlined a recommended removal of the current tariffs on Australian wine imports into China.

Media reports have quoted a statement from Trade Minister Don Farrel who has described the interim decision as a “welcome development”.

“It vindicates the government’s preferred approach of resolving trade issues through dialogue rather than disputation,” he said.

Foreign Minister Penny Wong also credited the positive development to the government’s approach to its relationship with China, which she said had stabilised through “calm and consistent dialogue”.

Industry response

In response to China’s suggestion that the tariffs could be abolished, industry leaders have expressed both enthusiasm and hesitancy in anticipation of the final decision.

“We’re pleased with the intention to remove tariffs on Australian wine into China, as outlined in the China Ministry of Commerce’s interim draft determination,” said Treasury Wine Estates CEO Tim Ford.

TWE was careful to stress that the draft is not China’s final determination, and that the decision remains subject to change by MOFCOM. TWE said it anticipates that MOFCOM will release a final determination in the coming weeks.

“This is subject to change, however we’re optimistic that the final determination will be a positive outcome for the Australian wine industry,” said Ford.

Referring to it F24 Interim Results announcement from 15 February 2024, TWE said it expects that the incremental EBITS contribution from the re-establishment of its Australian country of origin portfolio in China would be minimal through the remainder of F24.

Australian Grape & Wine (AGW) also welcomed the interim tariff decision.

“This is a positive step towards resuming trade with what was formerly our largest export market,” said Lee McLean, chief executive of AGW.

“While we acknowledge this interim decision, we note that the final outcome is still pending.  As such, we remain cautiously optimistic about the forthcoming decision and will await MOFCOM’s final determination.

“We appreciate the collaborative efforts from both the Australian and Chinese Governments, and industry partners, in working towards a resolution,” said McLean.

Mitchell Taylor, managing director and winemaker of Taylors Wines, was “optimistic yet cautious” at the news, saying there was now “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. However, they love the quality of our wines and how well they pair with traditional cuisine in the region.

“This is a big win for the Australian Government. Particular thanks to our Trade Minister Don Farrell, who has been diligent in rebuilding trade relationships with our largest trading market.

“This is a great sign for our industry which has been under enormous pressure to restructure and adapt to our changing economic circumstances. There is a lot of hard work ahead but a good sign that the industry can readjust and hopefully rebuild a promising market in a dynamic part of the world,” Taylor said.

Wine Australia said it was pleased to see the review progressing, and would continue to work closely with the government to “monitor and support our sector’s interests”.

“We are working to provide relevant details to the businesses in our sector as new information becomes available,” Wine Australia said in a statement to media yesterday.

“Mainland China remains an important market for the Australian wine sector.”

– Reporting by Meg Riley

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