ABARES Report to Client, Consultation with the Australian wine sector on barriers to trade in wine markets

Abstract

In 2009 ABARES initiated a two-part study designed to improve the understanding of factors affecting Australia's ability to trade in world wine markets, and to estimate the cost to the Australian wine industry of trade restrictions and import regulations.

Summary

The objectives of the project were twofold:

Part 1: Scope the trade restrictions and import regulations of concern to the industry.
Part 2: Build an analytical model to evaluate the net cost to Australia of the tariff restrictions of priority to the industry.

This document forms Part 1 of this study. It identifies those factors perceived by stakeholders of the Australian wine industry as restrictive to Australian wine exports.

There were 2500 licensed exporters of Australian wine and over 50 000 shipments of nearly 15 000 different wines in 2010-11. In that year 727 million litres of wine were exported, worth $2.0 billion to the industry. Over the past 20 years trade has become more important to the wine industry and has contributed a larger share to Australia’s total food exports (figures 1 and 2). Despite significant growth in Australian wine exports over this period, the industry now faces challenges both domestically and abroad. A global glut of wine has resulted in a decrease in the unit price and thus export returns to winemakers.

A range of trade restrictions and import regulations also affects export returns to the wine industry. For example, tariffs and duties are used primarily to protect domestic industries in importing countries. Both forms of protection increase the price of imported wines relative to domestically produced wine. Where differential tariffs or duties are in place, Australian wines can have relatively higher tariffs or duties applied compared with wine imported from other countries. This is the case in China, where lower tariffs are applied to wine imported from Chile and New Zealand, two countries with which China has negotiated a free trade agreement. Some import regulations increase the cost for exporters, including a range of nationally imposed requirements, such as country-specific labelling and packaging.

This report summarises the results of the consultation proceedings and the tariffs and import regulations imposed by some importing countries. The discussion presented in this report forms a basis for ABARES to undertake research to evaluate the net cost to Australia of tariffs imposed on Australian wine.