By 2019 Australian wine will be sold without tariff in China. The lift on the tax is part of a major free-trade agreement the countries intend to sign, ten years in the making.
For the last ten years, Australia and China have been discussing the possibility of lifting trade restrictions and easing tariffs. China is Australia’s primary trade partner, so it makes sense that they would move toward less restricted trade. Two trends are helping – that of China’s rising middle class learning about and enjoying western wine, and the fact that many western wines are moving into eastern markets.
The deal isn’t yet inked but the countries have signed a declaration of intent, signifying tentative agreement between the parties. The Australian government has to get approval from its major political parties. There are points the Labour party wants ironed out concerning bringing Chinese workers into the country. The party is concerned about doing anything that could result in a loss of jobs for Australian citizens. While the details of the deal are still secret, for the most part, spokespeople have stated that the deal contains provisions Labour has approved in the past.
The deal, like most, came with compromise. It will phase out tariffs rather than eliminate them all at once and China is not interested in importing some agricultural goods from Australia, preferring to keep rice, wheat, and other staples nationally produced. Still, forecasts predict that the boost the deal will bring to Australia’s economy is worth it.
Currently, Australian wine sees a 14-30% tariff when sold in China. The deal will eliminate this tariff while also starting a multi-year phase out of tariffs bringing the amount of Australian exports to China going from 85% tariff free to 93% tariff free over the next four years. The deal is set to go into effect next year.