China scraps tariffs on Australian wine as relations improve

China lifted its punitive tariffs on Australia’s wine exports, signaling an end to a three-year campaign of trade pressure on Canberra and raising hopes for a revival of the billion-dollar industry.

The Ministry of Commerce in Beijing announced the move on Thursday. The industry has been anticipating the announcement for weeks after some Australian vintners and lawmakers said the Asian nation had made an interim recommendation to lift the import taxes.

“In view of the changes in the relevant wine market conditions in China, it is no longer necessary to impose anti-dumping duties and countervailing duties on imported wines originating in Australia,” the commerce ministry said in a statement. 

The decision to remove trade curbs has raised hopes of reviving the lucrative wine trade between the two countries. The Australian government said it welcomes Beijing’s move and it will discontinue its legal proceedings at the World Trade Organization. 

Still, the national president of the Australia China Business Council warned Wednesday that winemakers might not make a full return to the market. 

“We expect to see a significant proportion of the wine coming back into China, but not all of it. A lot of it is just looking to other markets,” National President David Olsson told Bloomberg Television.

China imposed tariffs of up to 218% on Australian wine in March 2021, after then-Prime Minister Scott Morrison called for an international probe into the origins of Covid-19. The decision has contributed to a glut that has brought the wine industry to its knees. 

China was Australia’s top wine export destination in 2019, accounting for A$1.1 billion ($718 million). Rabobank estimated in August that Australia’s wine glut would continue for at least two years as it had 2.8 billion bottles of wine in storage — enough to fill 859 Olympic-sized swimming pools.

Wine imports from other origins including France and Chile increased since the duties were imposed, showing the domestic sector still faces fierce competition from overseas suppliers, China’s commerce ministry said in a separate statement. 

Still, the local market has suffered from weakening consumption and lifting the ban on Australian wine — once popular among Chinese consumers — could help boost demand, the ministry said.

Relations between the two countries started improving after the May 2022 election of Prime Minister Anthony Albanese’s government, culminating in the Australian leader’s visit to Beijing in November last year.

Trade curbs on some other Australian commodities have already been withdrawn. China now accounts for about 90% of the country’s barley exports after tariffs were scrapped in August. 

Australian businesses are looking forward to China removing restrictions on eight Australian abattoirs and on the import of live lobsters, Vaughn Barber, chair of AustCham China, said last week. China hasn’t officially acknowledged its restrictions on lobsters from Australia. 

The Australian government said it will continue to press for all remaining trade impediments affecting Australian exports to be removed.