China further reduces tariff on Australian wines

China has slashed the import tariff on Australian wines to 5.6%, as part of the two countries’ Free Trade Agreement that will eventually reduce wine tariffs to zero by 2019.

Upon the signing the FTA agreement on 20 December 2015, the tariffs on imported Australian wines was reduced to 11.2%, down from 14%, and on every 1 January over the following years, tariffs will see another deduction of 2.8% from previous year, based on the terms of the FTA agreement.

However, Australian wines as well as wines from other countries such as Chile and New Zealand that have signed FTAs with China, are still subject to 17% VAT and 10% excise tax.

The cut, however, is expected to give another boost to Australia’s growing presence in Chinese wine market, currently only tailing behind France. Its wine exports to China had overtaken the US last September, driven by increased demand for higher priced bottles, making China its most valuable export market, Wine Australia announced.

Timetable for tariff reduction on wine (source: Australia’s Department of Foreign Affairs and Trade)

From January to November last year, imports of Australian wines grew by 23.9% to US$481 million compared with the same period in 2015, accounting for 24% of China’s total market share, behind 44% of France, according to figures released by China Association for Imports and Export of Wine & Spirits.

Chile and New Zealand both enjoy zero tariff on wines thanks to the FTA and, in the second half of this year, China will scrap tariff on Georgian wines as well.