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Vine intervention: PM toasts China’s tariff rethink

The wine tariffs have devastated Australian producers.

The wine tariffs have devastated Australian producers.

In a significant diplomatic breakthrough, China has moved towards lifting tariffs on Australian wine, the last outstanding embargo imposed during a recent fraying of relations.

Prime Minister Anthony Albanese announced the development on Sunday before flying to Washington DC, where he will become the first prime minister in more than a decade to deliver a speech to American lawmakers.

The PM said China had agreed to review the impost on Australian wine, a concession that comes before another landmark visit to Beijing.

“Strong trade benefits both countries,” he said.

“This is a decision that will be worth more than a billion dollars in Australia’s exports.”

Albanese confirmed he would visit China on November 4 for a three-day state visit, the first such trip by an Australian leader in seven years, when Malcolm Turnbull visited in 2016.

Almost a third of Australia’s trade is with China.

The relationship was thrown into crisis when Scott Morrison became a leading global critic of China and called for an inquiry into the origins of the coronavirus.

Beijing responded with tariffs and sanctions worth more than $20 billion, or the value of 5.5 per cent of Australian exports.

This year, China has walked back other embargoes on beef and coal, which Australian producers had successfully re-routed to other markets.

But the 175 per cent impost on Australian wine that brought exports down to a fraction of their previous peak of $1.2 billion is still outstanding.

The tariffs have devastated Australian producers, creating a two billion-litre glut which producers have been unable to shift from their cellars.

Albanese said China had agreed overnight to review the remaining tariffs on wine, a process expected to conclude in five months.

“We’re very confident that this will result in, once again, Australian wine – a great product – being able to go to China free of the tariffs which have been imposed,” Albanese said.

“One in four of Australia’s jobs depend upon trade, and our most significant trading partner in terms of our exports is China, which is larger than our next three partners – South Korea, Japan and the United States – combined.”

Following Albanese’s announcement, China’s commerce ministry said it had reached a deal with Australia on a “proper settlement” of World Trade Organisation disputes over wine and wind towers.

Exports of goods and services to China grew from 11 per cent of Australia’s outbound trade in 2005 to 37 per cent in 2020, double America’s trade exposure.

The wine review follows the lifting of other diplomatic roadblocks last week.

China released Australian journalist Cheng Lei, and a review by security agencies last week found there was no reason to void a lease on the Port of Darwin granted to a Chinese company in 2015.

The United States has also recently sought to shore up economic ties with Beijing.

US Treasury Secretary Janet Yellen met her Chinese counterpart last month; Commerce Secretary Gina Raimondo followed her visit.

Albanese will meet Chinese President Xi Jinping and visit the China International Import Expo in Shanghai in November.

He said the visit would be “an important step towards ensuring a stable and productive relationship”.

This year is the 50th anniversary of Gough Whitlam establishing diplomatic relations with China on a groundbreaking Cold War trip.

The pair will also discuss a potential reciprocal visit by President Xi.

China’s ambassador to Australia Xiao Qian just days earlier said he was “optimistic” the trade dispute would be positively resolved in the “coming weeks or months”.

Opposition foreign affairs spokesman Simon Birmingham said the tariffs should be lifted immediately.

“These tariffs should never have been put in place in the first place,” he said.

“It was an attempt at economic coercion by China … they should not just be reviewed, but they should be removed and removed forthwith.”

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