China Eases Heavy Tariffs on Australian Wine Amid Improving Ties

On Thursday, China announced its decision to remove the tariffs it had imposed on Australian wine more than three years ago, marking a significant step toward mending relations with Australia. The Ministry of Commerce in China stated that this change will be effective from Friday, reversing the duties set in 2020 amid a diplomatic clash spurred by Australia’s call for an international investigation into the COVID-19 outbreak’s origins. These tariffs had caused Australian wine prices in China to surge by over 200%, significantly impacting Australian winemakers since China was the largest market for their exports.

The Australian government has expressed its approval of China’s decision, highlighting the timing as particularly beneficial for the country’s wine industry. China’s Commerce Ministry spokesperson, He Yadong, emphasized the mutual importance of the trade partnership between China and Australia, expressing a commitment to resolving issues through dialogue and promoting stable and prosperous economic and trade relations.

Before the imposition of tariffs, the wine trade with China was valued at 1.1 billion Australian dollars ($710 million) annually, significantly contributing to Australia’s economy. Australian Prime Minister Anthony Albanese anticipates that trade levels will surpass previous figures once the tariffs are removed, citing the expected resumption of trade based on past experiences with other Australian products reintroduced to the Chinese market. He remarked on China’s demand for high-quality wine and Australia’s capability to supply it during a visit to a winery in the Hunter Valley region.

The tariffs, part of broader sanctions on Australian goods set in 2020, were seen as retribution against Australia’s policies that included legislation against covert foreign interference, exclusion of Huawei from Australia’s 5G network over security concerns, and advocacy for an independent COVID-19 probe. Additionally, Australia’s strengthening security ties with the United States, particularly through the AUKUS pact involving nuclear submarine technology, had aggravated tensions with China.

However, relations have shown signs of improvement following a change in the Australian government and Prime Minister Albanese’s visit to Beijing last November. The thaw in relations was further evidenced by Australia pausing a World Trade Organization (WTO) complaint to facilitate the reopening of the Chinese market to Australian barley, another targeted product, and halting another WTO dispute over wine sanctions in return for a review of the tariffs by China. This series of actions indicates a concerted effort by the new Australian administration to rebuild diplomatic and trade relations with China.