A Chinese investigation has found that European Union brandy is being dumped on the Chinese market at a rate significantly lower than its retail price in Europe, threatening “substantial damage” to the local industry. However, the authorities stopped short of imposing provisional anti-dumping duties, a move that may temporarily reduce tensions in the brewing EU-China trade war. The Ministry of Commerce (MOFCOM) said in a preliminary ruling that the imports – which mostly come from France – had a retail price that was between 30.6% and 39% lower than that in Europe. The Ministry concluded that the highest margin applied to the French cognac brand Hennessy. The other well-known French producers investigated were Remy Martin, which had a margin of 38.1%, at Martell & Co, with 30.6%. A margin of 34.8% was applied to dozens of other firms. Should duties be applied at a later date, they are likely to be in line with these calculations.
EU Spokesman Olof Gill said the Commission was “fully confident that our cognac exports to China are completely in line with all applicable World Trade Organization (WTO) rules”, adding that “the merits of this investigation are questionable”. Beijing launched its probe soon after the European Commission announced an anti-subsidy investigation into Chinese-made electric vehicles – a move championed by the French government. The Chinese investigation was seen as a retaliatory move against France, and Beijing has since started investigating EU pork and dairy imports. MOFCOM also said it “will carefully study expert opinions and suggestions on increasing tariffs for imported fuel-powered cars with large-displacement engines”, a move likely to hit imports from Germany, Slovakia and Austria.
France’s exports of brandy to China have already been falling. In July, shipments fell 52.5% to USD97 million compared with USD203 million in the same month last year 2023, according to calculations based on Chinese customs data. Brussels proposed definitive duties on EV imports from China ranging from 9% for cars made by Tesla to 36.3% for those made by SAIC and other companies. These are likely to be written into law by October 30 after a vote of EU member states that could take place as early as mid-September, sources said. However, the Commission also announced that it would not collect provisional duties that had been in place since July because there were no legal grounds to do so.
Brussels insiders view the reprieve for brandy importers as a response to that, but believe tariffs are likely in future. Spirits Europe, a lobby group for the European drink industry, described Beijing’s findings as “arbitrary” and said the tariffs, if applied, “would constitute an unjustified market access barrier”, the South China Morning Post reports.
