by Ryan Woo, Albee Zhang and Joe Cash

BEIJING (Reuters) -China will lift surcharges on Australian wine from March 29, three years after imposing so-called “anti-dumping” and “anti-subsidy” duties amid a deterioration in relations between Beijing and Canberra.

These tariffs, which can reach 218.4%, were first imposed in March 2021 for a period of five years, alongside a series of other trade barriers on Australian commodities.

Relations between the two countries deteriorated after Canberra called for an investigation into the origins of COVID-19, before improving markedly last year.

French Bordeaux wine exporters, which supply 9% of China’s total wine and spirits imports, expect their exports to fall rapidly after the decision.

“Such agreements have an almost immediate effect on our exports,” commented Sara Briot-Lesage, spokesperson for the Bordeaux Interprofessional Wine Council (CIVB).

For example, the free trade agreement between the European Union and Japan, which entered into force at the beginning of 2019, led to a jump in French exports.

“This will undoubtedly happen between Australia and China. Those who have not concluded an agreement will be penalized,” she added.

France is China’s leading wine supplier and China is the largest export market for Bordeaux wine by volume.

Beijing continues to impose import duties on French wine, which leaves the country at a price of around 7.7 euros per bottle.

THE SITUATION HAS CHANGED

In the first half of 2023, Australian wine represented only 0.14% of Chinese wine imports, compared to 27.46% in 2020, according to the Ministry of Commerce press release.

“As the situation in China’s wine market has changed, anti-dumping and anti-subsidy duties imposed on wine imported from Australia are no longer necessary,” the Ministry of Commerce said in a statement.

The two countries signed a free trade agreement in 2015 which provided zero customs duties on imports of Australian wine into China as well as a tariff advantage of 14% compared to many other countries.

“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 tariffs on Australian wine have effectively prevented Australian producers from exporting bottled wine to that market. Australian wine exports to China were worth $1.1 billion in 2019.”

The imposition of these surcharges prompted Canberra to complain to the World Trade Organization (WTO).

Through the joint efforts of the two sides, China and Australia have reached consensus on properly resolving their disputes through the WTO, He Yadong, spokesperson for the Chinese Ministry of Commerce, told reporters on Thursday.

Australia has indicated that it will end its proceedings before the WTO.

Australia’s largest listed wine producer, Treasury Wine Estates, welcomed the announcement and will re-establish partnerships with customers in China.

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

The lifting of customs duties will also be welcome for Australian wine growers, as millions of vines are destroyed to curb overproduction amid falling wine consumption around the world.

(Reporting Ryan Woo, Joe Cash and Albee Zhang, with Sybille de La Hamaide in Paris; Kate Entringer)

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