By Jim Boyce | It’s been a good year for Australian wine importsÂ inÂ China and 2017 might be even better given a tariff cut set forÂ next week. That cut is part ofÂ ChAFTAâ€”the China-Australia Free Trade Agreement that came into effect just over a year agoâ€”under which the wine tariff will drop to 5.6 percent on January 1 from 8.4 percent this year. Most nationsÂ pay 14 percent save for those with free trade agreements, such as Chile, New Zealand and Australia. China also imposes about 34 percent in sales and value-added taxes, although those apply to domestic wines, too.
“Australian wine exporters have made the most of the preferential tariff rates into China and China is now Australiaâ€™s most valuable wine export market,” stated the Winemakers’ Federation of Australia in a recent press release. “In the last 12 months, exports to mainland China have grown by over 50 per cent to just under $500 million. To put this in context, just a decade ago, Australian wine exports to China were valued at $27 million.”
In terms of import volume, Australia has ranked second in China for much of the past decade. In recent years, Chile and Spain have challenged that position while France has remained the runaway leader with almost three times as much volume. Where Australia has truly shone is in terms of value. In 2015, its share of imports by volume was 14.3 percent while by value it was a whopping 23.4 percent, an enviable position. It had the highest declared value at USD5.9 per bottle (more details here).
The federation also underscored the high value of the wines:Â “The trade benefits of the China-Australia Free Trade Agreement, and the growing Chinese middle classâ€™ increased interest in wine, have meant that more than a third of Australian wine exports priced $10 andÂ more per litre FOB, are now destined for China.”
The tariff will be cut further to 2.8 percent in 2018 and to 0 percent in 2019.
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