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China and Australia: A Turning Point in Wine Tariffs?

The Guardian reports that a significant breakthrough is underway in the trade relations between China and Australia, particularly concerning the Chinese tariffs imposed on Australian wine.

China has agreed to review the tariffs it imposed on Australian wine producers. This decision comes after lengthy negotiations and is seen as a turning point in the ongoing trade dispute. In 2020, China had imposed significant tariffs, ranging from 107% to 212%, on Australian wine as part of a broader diplomatic dispute. This choice over the last three years has led to a dramatic drop in Australian wine exports to China, plummeting from over 1 billion dollars to 12 million dollars.

But what will be the key steps for this change?

Suspension of Dispute at the WTO: Both countries have decided to suspend their long-standing dispute at the World Trade Organization (WTO) while China conducts an "expedited review" of the tariffs. It is expected that this review process will last approximately five months.

Possible Resumption of Dispute: If the sanctions are not lifted after the review, Australia has indicated that it will resume the dispute at the WTO.

Confidence in a Positive Outcome: Australian officials, especially Anthony Albanese, the Australian Prime Minister, have expressed confidence in a positive outcome. The decision is particularly crucial for the Australian wine industry, which has struggled to find alternative markets after the breakdown in trade with China.

Improvement of Relations: Relations between Australia and China have shown signs of improvement since the election of the Albanese government. In August, China revoked tariffs on Australian barley.

Proposal for Tariff Exchange: China has proposed a deal to lift tariffs on Australian wine while seeking the removal of tariffs on three Chinese products, including wind towers used for building wind turbines.

Release of Australian Journalist: The recent release of Australian journalist Cheng Lei, who had been detained in Beijing for three years, is also cited as a positive development in the relations between the two countries.

Albanese's Visit to China: Anthony Albanese is scheduled to visit China from November 4th to 7th, where he will meet with Chinese President Xi Jinping and Premier Li Qiang. This will be the first visit to China by an Australian Prime Minister since 2016 and represents a significant step in the efforts to resolve trade tensions between China and Australia.

The revision of tariffs on Australian wine by China could have significant impacts on the global wine markets and producers. Countries that traditionally export large quantities of wine to China may experience increased and more structured competition.

In our opinion, this will inevitably require a deeper and strengthened bilateral relationship with China and the creation of new and articulated differentiation strategies in response to the ongoing changes in the global competitive landscape, including for Italian wine exports.


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