Hope in sight for Australian winemakers as China agrees to 'expedited' review of tariffs

Australian winemakers are hopeful that an end to China's trade sanctions might be forthcoming as the two nations enter bilateral trade talks this week.

An agreement between the two countries that could end tariffs on barley has Lee McLean, Chief Executive at Australian Grape and Wine, cautiously optimistic this could pave the way for winemakers.

Senior officials Ms Jan Adams AO PSM, Secretary of the Department of Foreign Affairs and Trade and Mr Ma Zhaoxu, Executive Vice Minister of Foreign Affairs of the People's Republic of China, held talks on trade, consular human rights, strategic competition, and Russia's invasion of Ukraine.

Secretary Adams reiterated that it was in the shared interests of Australia and China to continue on the path of stabilising the bilateral relationship.

Acting Prime Minister Penny Wong told Sky News on Tuesday that the two nations had reached a partial breakthrough in the long-running trade dispute, as China agreed first to look at the trade sanctions on barley.

"We are seeking to have a pathway to clear that impediment, and if that works, we will work to apply that to other Australian products," said Wong. "Probably the next one I'd want to look at is wine."

In return for Beijing's cooperation, Senator Wong said Canberra will temporarily suspend its appeal to the World Trade Organisation (WTO) over the trade restrictions.

"At its peak, the China market was valued at about $1.2 billion," said McLean. "Last year, we exported about $12 billion worth of wine to China, about a 99 per cent reduction in our total exports.

"That has major flow-on effects across the industry… to put it in context, our next two largest export markets at that time were the US and the UK, and they both sat at just under $500 million each," he said.

McLean is taking an approach of cautious optimism, saying he's confident that if the tariffs are removed there's still strong demand for Australian wine in China even though other wine exporters like Chile and France have gained a larger market share in Australia's absence.

"[China] may well be Australia's largest export market again, but equally, I don't believe we're going to return to that $1.2 billion figure in the short to medium term.

"For Australian producers, there needs to be an ongoing effort to diversify across a number of markets. We want to make sure that we are growing good opportunities in a broader range of markets around the world," said McLean.

Other industry leaders said they too hope the breakthrough on barley would pave the way for China to lift restrictions on other products, including wine, which has been under sanction since late 2020.

Tony Mahar, Chief Executive of the National Farmers' Federation, said the bilateral talks are in the long-term interests of all parties, including Australian farmers and winemakers.

"This agreement highlights the value of the WTO process to encourage mechanisms for bilateral dispute resolution. We anticipate this will mean Australian farmers will have access to the Chinese market sooner.

"We also hope this development is another step forward in recalibrating our relationship with China and will mean progress will also advance on removing trade barriers for rock lobster and wine," he said.

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