Australian wine exports and the AUSFTA

Abstract

Using data from the Australian Wine and Brandy Corporation, this paper explores the potential effect of the Australia-United States Free Trade Agreement (AUSFTA) on Australian wine exports to the United States. Specifically, it examines the relationship between the Australian-US real exchange rate, and wine sales of nine different categories of Australian wine exports between 1990 and 2004. The analysis indicates that sales of mid-valued red wine, white wine and sparkling wines are more sensitive to changes in price than other types of wine. This suggests that AUSFTA is likely to generate a larger proportional impact on sales of these wines than other varieties.