Treasury Have Moved Beyond Chinese Country of Origin Restrictions

The Chinese Ministry of Commerce tariffs effectively shut the door to the lucrative Chinese market in mid-fiscal 2021 with tariffs of 176% imposed on Australian country-of-origin wine. We had previously noted China appeared unlikely to back down, with spokesperson Wang Wenbin declaring the sanctions "legitimate, lawful and beyond reproach." But Senator Wong's visit to Beijing, the first Australian minister to travel to Beijing since 2018, brings renewed hope of restrictions easing. However, we think Treasury is effectively repositioning its business beyond the restrictions. Indeed, Treasury's strategy assumes the Chinese tariffs on Australian wine are permanent, instead aiming to supply the Chinese market with French and American-made wine (which do not attract Australian tariffs), and South African and Chilean country of origin wine for Rawsons Retreat, as well as launching the first Penfolds wine made in China in September 2022.