The Wine in China
case mentioned that Chinese consumers had recently become exposed to a greater
variety of wines, including Australian wines as a result of the 2015 free trade
agreement between the two countries.
Being an Aussie, I was interested in learning more about the
agreement and the affect which it will have on the Australian wine industry.
What is the China-Australia Free
Trade Agreement?
The China-Australia Free Trade Agreement (ChAFTA) is a
bilateral free trade agreement which was signed in June 2015 after 21 rounds of
negotiation over 10 years. The deal came into force in December 2015.
Under full implementation 95% of all Australian exports to
China will be tariff free. The deal is particularly targeted at Australia’s
strong agricultural sector.
The deal is particularly significant for Australia as China
is Australia’s largest export market, accounting for about a third of total exports
and an increasing amount of foreign investment.
What does
it mean for Australian Wine?
At the time of
the agreement, China was Australia’s second largest export market for wine
($415M in 2015-16). However, Australia, competed with both New Zealand and
Chile who both had preferential wine access under their own FTAs with China. It
was hoped that ChAFTA would help close this gap.
Under ChAFTA, tariffs
of 14 and 20 per cent on wine, and tariffs of up to 65 per cent on alcoholic
beverages and spirits, are being eliminated by 1 January 2019.
What has been the impact to date?
One year after
ChAFTA came into effect, the Winemakers’ Federation of Australia announced that
Australian wine exports to China had increased by 50%.
Wine exports to
China in 2016 were valued at $500M. In 2006, that figure was just $27M. China
is now $62M clear of Australia’s next biggest wine export market, the United
States.
It is worth
noting that in 2016 wine exporters were still paying an 8.4% tariff. This year
that figure has dropped to 5.6%.
With tariffs
continuing to fall until 2019, expect the prominence of Australian wine in China to grow
as it looks to establish itself alongside France as the wine of choice for
Chinese consumers.
Sources
http://www.adelaidenow.com.au/business/china-solidifies-its-spot-as-australias-number-one-wine-export-destination/news-story/4df4e00683619a5333afa67387d99b5d
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