China will remove anti-dumping and anti-subsidy taxes on Australian wine on March 29, the Chinese commerce ministry announced on Thursday, capping three years of punishing penalties and providing long-awaited relief to Australian wine producers.

The tariffs of up to 218.4% were originally applied in March 2021 for a five-year period, along with a slew of other trade obstacles on Australian exports, as relations deteriorated after Canberra demanded an investigation into the origins of COVID-19.

Ties have improved dramatically since last year, prompting China to gradually eliminate trade barriers on Australian goods ranging from barley to coal, raising optimism that harsh tariffs on exports to Australia’s main wine export market could be lifted shortly.

“Given the situation in China’s wine market has changed, the anti-dumping and anti-subsidy tariff imposed on wine imported from Australia is no longer necessary,” the commerce ministry said in a statement.

Australian wines shipped into China were previously subject to zero duties following the signing of a free trade deal in 2015, providing them a 14% tariff advantage over many other wine-producing countries.

According to a statement from the commerce ministry, in the first half of 2023, Australian wine accounted for only 0.14% of Chinese wine imports, down from 27.46% in 2020 before the duties were implemented.

“We welcome this outcome, which comes at a critical time for the Australian wine industry,” the Australian government said in a statement.

“Since 2020, China’s duties on Australian wine effectively made it unviable for Australian producers to export bottled wine to that market. Australia’s wine exports to China were worth $1.1 billion in 2019.”

Beijing began slapping duties on Australian products in 2020, causing Canberra to file a complaint with the World Trade Organisation (WTO). When tariffs on Australian wine were imposed in 2021, Canberra requested the WTO to arbitrate the case.

China and Australia have reached an agreement on the correct resolution of disputes under the WTO framework, according to He Yadong, a spokesman for the Chinese commerce ministry, who spoke to reporters on Thursday.

According to the Australian statement, the removal of Chinese levies signals the end of Australia’s legal procedures at the WTO.

Treasury Wine Estates, Australia’s largest publicly listed winemaker, said it welcomed the announcement and will begin cooperating with clients in China to boost sales, marketing, and brand management.

“Today’s announcement is a significant positive not only for Treasury Wine Estates, but also for the Australian wine industry and wine consumers in China,” CEO Tim Ford said in a statement.

“This is a medium-term growth opportunity that we will pursue in a deliberate and sustainable manner, focused on growing our portfolio in China.”

The removal of tariffs will also be welcomed by Australian grape growers, as millions of vines are being felled to reduce overproduction in the face of declining global wine consumption.

(Adapted from Reuters.com)

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