UPDATE 4-China lifts tariffs on Australian wine, ends three-year freeze in trade

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China to lift tariffs of up to 218.4% from March 29

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China first imposed tariffs in March 2021

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China was previously Australia's No.1 wine export market

(Adds comment from wine distributor in paragraph 8; recent import data in paragraph 9; Australian Chamber comment in paragraph 15)

By Ryan Woo, Albee Zhang and Casey Hall

BEIJING, March 28 (Reuters) - China will lift anti-dumping and anti-subsidy tariffs on Australian wine from March 29, the Chinese commerce ministry said on Thursday, ending three years of punitive levies and offering long-awaited relief to Australian wine producers.

The tariffs, of up to 218.4%, were first imposed in March 2021 for a period of five years along with a host of other trade barriers on Australian commodities when ties soured after Canberra called for a probe into the origins of COVID-19.

Ties have improved significantly since last year, leading China to steadily lift trade hurdles on Australian goods ranging from barley to coal, and raising hopes the punishing tariffs on shipments to Australia's top wine export market would soon be removed.

"Given the situation in China's wine market has changed, the anti-dumping and anti-subsidy tariff imposed on wine imported from Australia is no longer necessary," the commerce ministry said in a statement.

Previously, Australian wines imported into China were subject to zero tariffs after the signing of a free trade agreement in 2015, giving them a 14% tariff advantage over many other wine-producing nations.

In the first half of 2023, Australian wine accounted for only 0.14% of Chinese wine imports compared with 27.46% in 2020 before the duties were imposed, according to the commerce ministry statement.

"We welcome this outcome, which comes at a critical time for the Australian wine industry," the Australian government said in a statement.

"Since 2020, China's duties on Australian wine effectively made it unviable for Australian producers to export bottled wine to that market. Australia's wine exports to China were worth $1.1 billion in 2019."

"This is great news," said Campbell Thompson, the Beijing-based Australian CEO of wine importer and distributor The Wine Republic. "We are delighted and we look forward to re-introducing some great wines to China very soon."

Australian wine makers had been

preparing

for the dropping of Chinese tariffs for months. Trade data show almost 2.5 million litres worth of wine from Australia entering Hong Kong in December, up from around 685,000 litres a month in recent years and the most since September 2019.

Beijing started imposing tariffs on Australian products in 2020, prompting Canberra to complain to the World Trade Organisation (WTO). When the tariffs on Australian wine were levied in 2021, Canberra urged the WTO to arbitrate in the dispute.

Under the joint efforts of both sides, China and Australia reached a consensus on the proper settlement of disputes under the WTO framework, He Yadong, a spokesman at the Chinese commerce ministry, told reporters on Thursday.

The removal of the Chinese duties means Australia will discontinue its legal proceedings at the WTO, according to the Australian statement.

Australia's top publicly listed winemaker, Treasury Wine Estates, said it welcomed the announcement and will start partnering with customers in China to expand sales and marketing, as well as brand management.

"Today's announcement is a significant positive not only for Treasury Wine Estates, but also for the Australian wine industry and wine consumers in China," CEO Tim Ford said in a statement.

According to Simon Woods, CEO of Australia's Chamber of Commerce in Shanghai (AustCham Shanghai) the announcement will "raise confidence within the Australia-China business community."

"This is fantastic news and is the product of hard work on the part of Australian and Chinese governments and businesses," he said.

The lifting of the tariffs will also be a welcome move for vine growers in Australia as millions of vines are being destroyed to rein in over-production amid falling consumption of wine worldwide. (Reporting by Ryan Woo, Casey Hall, Joe Cash and Albee Zhang; Editing by Tom Hogue, Miral Fahmy and Raju Gopalakrishnan)