China's Ministry of Commerce recommends dropping tariffs on Australian wine exports, potentially impacting $1 billion in trade.

The recommendation follows Australia's decision to suspend its dispute with the World Trade Organisation until March 31.

An interim recommendation states that duties on Australian wine are no longer necessary, with a final decision expected later in the month.

Australian officials, including Foreign Minister Penny Wong and Trade Minister Don Farrell, have expressed support for resolving trade issues through dialogue.

The review's positive direction mirrors a previous case where China lifted tariffs on Australian barley.

Despite the progress with wine tariffs, Australia still faces $2 billion in Chinese sanctions on other products, with the situation's resolution awaiting a final decision from Beijing.