Is China about to open the door?

The Chinese Ministry of Commerce (MOFCOM) has released an interim draft determination outlining a proposed removal of the current tariffs on Australian wine imports into China.

Treasury Wine Estates says it was advised of the positive development today.

The determination is not final and is subject to change by MOFCOM, TWE says in an announcement to the ASX released tonight (Tuesday).

“TWE anticipates that MOFCOM will release a final determination in the coming weeks,” the statement says.

“TWE refers to its F24 Interim Results announcement from 15 February 2024, where it outlined the key initiatives it would pursue should the tariffs be removed.

“In such a scenario, TWE expects that the incremental EBITS contribution from the re-establishment of its Australian country of origin portfolio in China would be minimal through the remainder of F24.”

CEO Tim Ford says, “We’re pleased with the intention to remove tariffs on Australian wine into China, as outlined in the China Ministry of Commerce’s interim draft determination.

“This is subject to change, however we’re optimistic that the final determination will be a positive outcome for the Australian wine industry.”

Trade Minister Don Farrell says the interim recommendation is “a welcome development”.

“It vindicates the government’s preferred approach of resolving trade issues through dialogue, rather than disputation.”

In October last year China agreed to review its five-year tariffs on Australian wine.

Industry analysts are advising potential exporters to China to exercise caution.

China was the Australian wine industry’s first billion-dollar market, reaching $1.2 billion in 2019.

Australian wine exports reached a record $3.1 billion in the 12 months to October 2020 with China contributing about $1.2 billion of that.

By the end of 2020 our exports had crashed to $2.89 billion – a loss of $210 million in two months.

In December 2020 Warren Randall said “cataclysmic change” would sweep through the wine industry.

Last year Australian wine exports stood at $1.9 billion.

The wine industry is in the midst of a crisis with an oversupply of red wine, mainly Cabernet Sauvignon and Shiraz.

• China, Australia make steady progress in addressing wine trade dispute.