China-Australia relations: tariffs drive ‘exceptionally challenging’ environment for Australian wine exporters

·3-min read

Challenging market conditions continue to impact Australian wine exporters due to high tariffs imposed by China, according to a report released on Wednesday.

Australian wine exports decreased by 26 per cent in value to A$2.05 billion (US$1.5 billion) and 13 per cent in volume to 628 million litres in the year ended March, figures released by Wine Australia showed.

Exports, excluding mainland China, declined by 3 per cent in volume but increased by 7 per cent in value to A$2.03 billion, which was the highest since 2010, the government statutory body said.

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“While the increase in value excluding mainland China was strong at A$129 million, it did not come close to offsetting the decline in value to mainland China with a loss of A$844 million,” said Rachel Triggs, Wine Australia’s general manager of corporate affairs and regulation.

Over the past 15 months, Australian wine exporters have had to navigate through an exceptionally challenging operating environment

Rachel Triggs

China officially applied duties of between 116.2 per cent and 218.4 per cent on Australian wines in containers of up to two litres in March 2021 until 2026, following anti-dumping investigations.

“Over the past 15 months, Australian wine exporters have had to navigate through an exceptionally challenging operating environment, largely led by the imposition of high deposit tariffs on bottled Australian wine imported to mainland China, the continuing impact of the global freight crisis, and a counter-swing in some markets after Covid-19 related stockpiling in 2020,” Triggs said.

The ongoing trade dispute between Australia and China has led to reports of millions of grapes being left to rot at vineyards across the country.

“Small-scale producers in particular tend to focus on just one or two markets because they do not have the budget to manage logistics and marketing into multiple markets,” said James Laurenceson, director at the University of Technology Sydney’s Australia-China Relations Institute.

“For many, China was their focus. And so when the China market effectively closed, they were left stranded.”

Wine Australia said the key drivers of growth in export value for the first quarter of this year were Singapore, Hong Kong, Thailand, South Korea, Taiwan and Japan.

The decline in total wine export volume, excluding mainland China, came from Australia’s two biggest markets of the United Kingdom and the United States, Wine Australia said, while the ongoing global freight crisis also played a part in the drop.

Australia has been working to reduce its reliance on China since Beijing imposed bans on Australian coal, wine, beef, crayfish, log timber and barley.

Triggs said efforts to diversify were “slowly reaping rewards” for Australian wine exporters, adding that the easing of coronavirus restrictions will see some established markets open up and demand stabilised.

Canberra lodged a formal complaint over China’s wine tariffs with the World Trade Organization in June, and the Geneva-based body agreed to establish a dispute-settlement panel to address the complaint in October.

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