What You Need To Know – Chinese Ministry of Commerce Makes Interim Recommendation To Remove Australian Wine Tariffs

The Chinese Ministry of Commerce (MOFCOM) has released an interim decision recommending the existing anti-dumping and countervailing tariffs on Australian wine are no longer necessary. A final determination is still pending and is expected to be delivered in the coming weeks.

Background

In March 2021, the Chinese Ministry of Commerce (MOFCOM) imposed finalised anti-dumping and countervailing duties of up to 220% on wine originating from Australia, crippling Australia’s Chinese export market. In June 2021, Australia commenced dispute settlement proceedings in the World Trade Organisation (WTO) in relation to excessive duties imposed by MOFCOM on various Australian products.

In October 2023, Australia and China agreed to suspend the WTO dispute relating to the Australian wine tariffs while China undertook an expedited review of the tariffs, and in November 2023, the MOFCOM commenced its review of the anti-dumping and countervailing duties on Australian wine.

Key Takeaways

During the review, MOFCOM received submissions from a number of Chinese industry stakeholders and Australian industry stakeholders. Stanton & Stanton advised a number of commercial wineries and industry bodies by preparing responses to the MOFCOM questionnaires and assisting with their further submissions to the MOFCOM.

The MOFCOM examined claims there had been a change in the Chinese wine market following three years of tariffs which resulted in:

1. significant declines in wine imports from Australia;
2. significant restructuring of import sources in the domestic market;
3. a decline in market demand continuing;
4. changing consumer demands in relation to taste and health issues; and
5. increases in import prices and the domestic consumer market coming under pressure.

The MOFCOM determined significant changes are present in the Chinese wine market. Under the new circumstances, an adjustment to the tariffs will promote competition within the Chinese wine market due to a greater diversity of imported wine, alleviating pressures of rising prices for consumers, promoting the consumption of demand and market activity in the Chinese domestic wine market and providing greater wine options to consumers.

On this basis, the MOFCOM found the imposition of anti-dumping and countervailing tariffs on Australian wine to no longer be necessary.

What does this mean for Australian growers, wine producers, and exporters?

The final determination to remove the wine tariffs is still pending and subject to change. It is expected to be delivered within the coming weeks. However, the MOFCOM’s interim decision recommending the removal of tariffs is a positive sign.

With this in mind, and without over committing until a final determination is made, it would be prudent for Australian growers, wine producers and distributors to bring the Chinese market back into its forecasts and recommence discussions with their various stakeholders within the Australia/China export market.

It is important for wine industry stakeholders to be reminded that the removal of Chinese tariffs will not result in a quick fix to the challenges facing the Australian wine industry. It will be some time before there is enough data to confirm how the re-opening of the China market:

1. impacts the oversupply of grapes and wine in Australia; and
2. influences the way China Customs act, especially with respect to Australian bulk wine exports.

Recent market data suggests the market share of the imported wine market in China has decreased substantially (where Chinese wine has seen a significant increase) and that Chinese consumers are drinking less wine generally. Nonetheless, a recovery of the Chinese export market for Australian wine to forecasted levels would no doubt be a major boost for the industry.