The Australian Government has confirmed the Chinese Ministry of Commerce (MOFCOM) has made an interim draft determination to abolish the punitive tariffs placed on Australian wine imported into China.
Trade Minister Don Farrell said: “The interim recommendation to remove tariffs on Australian wine is a welcome development. It vindicates the government’s preferred approach of resolving trade issues through dialogue rather than disputation.”
Minister for Agriculture Murray Watt added: “Today’s development is good news for our local wine growers and makers.”
The confirmation follows the Chinese ambassador foreshadowing a positive outcome at The Australian Financial Review Business Summit on Monday.
“Currently, Chinese authorities are reviewing and investigating our tariffs on Australian wine and things are moving on the right track, in the right direction,” Chinese ambassador Xiao Qian told the summit.
Tariffs of up to 220 per cent were applied to Australian bottled wine imported into China more than three years ago. causing the collapse of the country’s $1.2 billion export trade.
Treasury Wine Estates issued an ASX announcement saying it has been advised by MOFCOM that the interim draft determination outlined a proposed removal of the current tariffs on Australian wine imports into China.
“The interim draft determination is not a final determination and is subject to change by MOFCOM. TWE anticipates that MOFCOM will release a final determination in the coming weeks,” the statement said.
“TWE refers to its F24 Interim Results announcement from 15 February 2024, where it outlined the key initiatives it would pursue should the tariffs be removed. In such a scenario, TWE 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.”
Crisis talks over Australian wine glut
Commonwealth and state agriculture ministers announced last week that they are taking urgent action to resolve Australia’s red wine grape glut.
The agriculture ministers met on 8 March 2024 and discussed the significant challenges facing wine grape growers, particularly in the inland regions. They agreed to establish a viticulture and wine sector working group, comprising representatives of the Commonwealth, state and territory governments, Wine Australia, Australian Grape and Wine and other relevant groups as agreed by the working group, to provide recommendations on how to address the challenges facing growers.
The working group will be expected to visit regions most impacted by the oversupply, including the Riverland in NSW and South Australia and will report back to Agriculture Ministers out of session by the end of April 2024.
In August 2023 Rabobank predicted two tough years ahead for Australian vineyards and noted that not even early removal of Chinese anti-dumping tariffs would be enough to prevent the wine industry facing several years of oversupply.