China trade talks bring hope for Australian wine exports

There are hopes that Australian wine export issues will soon be resolved following in-person talks between Minister for Trade and Tourism Don Farrell and China’s Commerce Minister Wang Wentao.

China imposed of heavy tariffs on Australian wine, barley, beef, lobster, coal and timber in late 2020. About 800 Australian wine exporters were affected, with the decline in value of exports to mainland China resulting in a loss of $844 million in the year ended March 2022 alone.

Following last week’s meeting, the Chinese Commerce Ministry said Beijing would work with Australia on resolving trade disputes.

China recently agreed to review the barley bans in response to the suspension of a World Trade Organisation challenge by Australia, raising hopes for sanctions on the grain to be lifted, together with those on wine.

Ferrell told the Today Show: “There are some good signs. We’re well down the track of resolving the dispute over barley and of course we’re going to use the processes that we developed to resolve the barley dispute with wine. The barley dispute we expect to be resolved in the next month or two.”

Farrell said he was keenly aware of the impact the tariffs were having on winemakers.

“I live in the Clare Valley and I talk to winemakers about some of the problems that they’ve been suffering. The direction of the government has been to try and diversify our trading relationships so that we’re not just reliant on one large country. We’ve recently been to India, we’ve been to Vietnam, we’ve been to the Philippines. We’ve now got a free trade agreement with the United Kingdom and we’re very, very close to getting a free trade agreement with the European Union.”

The Chinese Commerce Ministry said it was willing to work with the Australia to jointly expand more areas of co-operation, and “hopes that the Australian side can provide a good business environment and treat Chinese companies and products fairly and justly.”

Farrell and Wang discussed the trade issues at the 16th Joint Ministerial Economic Commission in Beijing, the first time the meeting has been held since 2017.

“I pressed Australia’s position for the timely resolution of remaining trade impediments, which would be in the interests of both countries,” Farrell said.

“Minister Wang confirmed that China’s expedited review of barley duties is on track. I reaffirmed that we expect a similar process to be followed to remove trade barriers for Australian wine.

“I achieved what I came here for – to find a pathway to resolve the remaining trade impediments. Minister Wang and I agreed to step up dialogue under our existing free trade agreement and other platforms to stabilise the trading relationship.

“We agreed on the value of the bilateral High Level Dialogue on Trade Remedies and discussed opportunities for further cooperation, including on climate change, digital trade and e-commerce, and WTO reform.”

Farrell invites Chinese minister to South Australia

Farrell also invited the Chinese commerce minister to visit his family’s eponymous vineyard in South Australia.

“Can I formally invite you to come to Australia and in particular, come to Adelaide, in South Australia?” he said.

“Forget about Sydney and Melbourne. Come to Adelaide and hopefully you can come and stay at my beautiful vineyard in the Clare Valley in South Australia.”

Farrell also gifted his Chinese counterpart a bottle of 2019 Godfather Too shiraz from his vineyard. He said later that Wang had accepted the invitation to visit Australia.

Condemnation from Shadow Minister

The Shadow Minister for Trade and Tourism has expressed his “deep disappointment” that Farrell’s visit to China has not delivered any relief from “China’s punitive, unfair, and illegal trade sanctions on Australia exports”.

“I publicly supported the Trade Minister’s visit to China as a positive step in the trade relationship thaw but nevertheless, join the many exporters who are disappointed that it delivered no dividend in sanction relief,” Hogan said.

“Australia has been a good faith actor in its engagement with China, reflecting the importance of the trade relationship and the longevity of our diplomatic relations.

“This includes the Albanese Government’s recent decision to stay the WTO barley dispute resolution process. I join with the Trade Minister in asking the Chinese government to go one step further from enhance dialogue and remove the sanctions.”

China not to blame for wine industry crisis?

According to Meiningers International China is “not guilty of causing Australia’s wine industry crisis”.

Dudley Brown writes: “The tariffs imposed on Australian wine by the Chinese government in late 2021 in retaliation for regrettable remarks by former Australian PM Morrison about COVID have wreaked havoc in the Australian wine industry since. Australian and international media and spokespeople for the industry have since repeatedly characterised the ensuing massive wine oversupply problems as ‘China’s fault.’ According to data from Wine Australia, this does not appear to be exactly the case.”

“Contributing to this, Chinese domestic consumption has dropped by almost 50% or 1 billion litres per year since 2017 leaving the wine exporting countries of the world awash in red wine.” 

Meininger’s contacted a large number of producers and said almost none of whom were prepared to talk on the record about the situation.

The exception was Barossa Valley producer Elderton Wines’ co-managing director Cameron Ashmead. He noted that “aggressively attacking China hasn’t served the industry well” and that “It would be good if the large wine companies made less inexpensive wine and focused more on hand-made and sustainable wines that Australia can excel at.”

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Categories: Business