China will require major European brandy exporters to raise prices or risk anti-dumping taxes of up to 34.9 percent from Saturday, the latest salvo in its long-running trade spat with the bloc.
Almost all EU brandy is cognac produced in France, exports of which to China are worth 1.4 billion euros (US$1.6 billion) per year.
Beijing launched an investigation last year into EU brandy, months after the bloc undertook a probe into Chinese electric vehicle (EV) subsidies.
It said it had determined in a preliminary ruling that dumping had occurred and imposed “temporary anti-dumping measures” on imports of the alcoholic beverage — moves now costing the industry 50 million euros per month.
Beijing’s commerce ministry said on Friday that China’s tariff commission had “decided to impose anti-dumping duties on imports of relevant brandy originating in the EU” from Saturday.
But Beijing said in an explanatory note that several major French cognac producers had signed onto a price commitment to avoid the tariffs — as long as they sell at or above an agreed minimum price.
French liquor giant Jas Hennessy would be hit with levies of 34.9 percent if it reneges on the deal, it said.
Remy Martin will be hit with 34.3 percent and Martell 27.7 percent.
“The decision to accept the price commitment once again demonstrates China’s sincerity in resolving trade frictions through dialogue and consultation,” a commerce ministry spokesperson said in a statement.
France’s umbrella cognac producers association BNIC — which covers key producers from Hennessy to Remy Cointreau and Martell — confirmed the deal to avoid levies by hiking prices, calling it a “less unfavourable” outcome.
Still, the European Commission said Friday after the announcement that it “regrets China’s decision”.
“We believe that China’s measures are unfair. We believe they are unjustified. We believe they are inconsistent with the applicable international rules and are thus unfounded,” said the commission’s trade spokesman, Olof Gill.
China has sought to improve relations with the European Union as a counterweight to superpower rival the United States.
But deep frictions remain over their economic relationship — including a yawning trade deficit of US$357.1 billion between China and the EU, as well as Beijing’s close ties with Russia despite Moscow’s war in Ukraine.
Bitter taste
The new levy threats come as Chinese top diplomat Wang Yi has held fraught meetings with his counterparts during a tour of Europe this week.
They will likely be high on the agenda when he meets French President Emmanuel Macron and Foreign Minister Jean-Noel Barrot on Friday afternoon in Paris.
A trade row between Beijing and the bloc erupted last summer when the EU moved towards imposing hefty tariffs on electric vehicles imported from China, arguing that Beijing’s subsidies were unfairly undercutting European competitors.
Beijing denied that claim and announced what were widely seen as retaliatory probes into imported European pork, brandy and dairy products.
The bloc imposed extra import taxes of up to 35 percent on Chinese EV imports in October.
Beijing later lodged a complaint with the World Trade Organization, which said in April that it would set up an expert panel to assess the EU’s decision.
China and the EU are scheduled to hold a summit this month to mark the 50th anniversary of the establishment of diplomatic ties.
Bloomberg News reported on Friday, citing unnamed sources, that Beijing intends to cancel the second day of the summit.
