Are Chinese Wine Tariffs About to be Dropped?

Last month, a delegation of primary producers joined the South Australian Premier, Peter Malinauskas, on a four-day visit to China with the express goal of re-engaging with key customers and members of the government.

The delegation stated the case for increased engagement with the South Australian agricultural sector, including grains, meat, seafood and wine.

While the SA delegation was in Beijing, Malinauskas met with Chinese government representatives, including the Vice Minister for the Ministry of Commerce, Guo Tingting.  

In an interview with Drinks Trade, Malinauskas said, "I met industry leaders and government officials to renew enduring partnerships and explore further opportunities for trade and investment. China continues to be South Australia's largest export market and a very important trade and economic partner for our state.

“Good progress has been made at a Federal Government level to stabilise relations with China, and the recent trip ensures that at a state level, the South Australia-China relationship remains strong."

Travis Fuller from Kilikanoon Wines was part of the delegation and expressed a positive sentiment for the trip, including the government's support of the wine industry's engagement with China.

"Both State and Federal governments have been working diligently behind the scenes to find a resolution to this issue. Firstly, Penny Wong's visit to China for the high-level dialogue session included Wine Australia representatives. Then, our visit with the Premier of South Australia was soon to be followed by a visit by the Prime Minister in November. All these visits build the case and momentum for resolution on wine. The Premier has been closely engaged and has personally ensured that he presents a very strong case to all levels of government and industry in China on South Australian wine," said Fuller.

The prospect of Chinese tariffs on Australian wine being rewound in the short or medium term is something many feel positive about.

Richard Dolan, joint managing director of South Australia's Bec Hardy Wines, was quoted in news.com.au on the strong people-to-people links between Chinese and Australian businesses.

"I was in the room yesterday watching a couple of other wine producers hugging a distributor they have probably not seen for two or three years," said Dolan. "So those relationships are still very strong."

The value of Australia's $1.2bn worth of wine exports to China evaporated following the diplomatic dispute that reared up during COVID-19. However, the Chinese authorities removed its 80 per cent tariff on Australian barley in August and have recently put forward a deal linking the reduction of wine tariffs to favourable treatment of its wind towers, railway wheels and stainless-steel sinks. While it's a deal the Australian Government wants to avoid pursuing, it is a step forward.

Minister for Agriculture, Forestries and Fisheries Murray Watt said last month, "The Albanese government regards these as entirely separate, but will pursue a dialogue across all matters."

Wine Australia has worked tirelessly in this space over the last few years.

Martin Cole, CEO of Wine Australia, said, "The Australian wine sector has made a long-term commitment to building the market for Australian wine in China, and it's clear there is still a positive sentiment for our products. Wine Australia is working with the Australian Government and the sector to ensure a coordinated approach is taken to re-entry and that the sector is well positioned to re-establish trade relationships". 

The question in everyone's mind is, assuming the barriers to trade are removed, and it's 'business as normal', how difficult will it be to regain the market share and rebuild the export values? Malinauskas is confident we can experience a healthy return to the market.

"South Australia is home to some of the most famous regions, historic estates and the oldest vines in the country. Chinese consumers have demonstrated a strong affinity for premium and luxury goods, creating demand for high-quality South Australian wines; therefore, should tariffs be removed, and that's an issue to be resolved at the Federal Government level, I'm confident the wine sector can again succeed in that market," Malinauskas said.

Travis Fuller also believes a resolution is now much closer.

"I believe that we are getting closer to a resolution on the issues around tariffs; however, it would be a brave person to put a timeline on it. The SA delegation, I believe, was instrumental in setting the tone of the meetings and working cohesively to deepen relationships and reaffirm friendships with customers and government representatives during the visit."

With Albanese's visit due to occur before the end of the year, coincidently 50 years since Gough Whitlam's first trip to China as prime minister, the smart money is on a bottle of 1974 Penfolds Grange as a part of the gifting ceremonies.