China has decided to levy anti-dumping duties on European brandy, mostly produced in France, for the next five years – an announcement made while Foreign Minister Wang Yi was on his European tour seeking to resolve trade disputes and improve ties. “There is dumping of related imported brandy from the EU, the domestic brandy industry faces a material threat of injury, and there is a causal relationship between the dumping and the material injury threat. The determined dumping margins range from 27.7% to 34.9%,” China’s Ministry of Commerce (MOFCOM) said in a statement. The tariffs took effect on July 5, and there will be no retroactive imposition of anti-dumping duties on imports of the relevant brandy originating from the EU from October 11 up to and including July 4. “Beijing has been holding back from actually levying duties in the hope of a softer EU stance on China,” said Xu Tianchen, Senior China Economist at the Economist Intelligence Unit (EIU). “Now it is clearly disappointed by the EU playing hardball despite the Chinese overture.”
“The tensions are clear, phase three investigations are open, and there are also ones on pork and dairy,” said Alicia Garcia-Herrero, Chief Economist at French investment bank Natixis. “Every time the EU Commission says, ‘we’re done, no high economic dialogue’, which is what has happened, China will come with one investigation, let alone export control. They have a lot of leverage. I think the EU Commission needs to first wait for a deal with U.S. President Donald Trump. They’re not going to risk it. Secondly, beyond Trump, they’re done – they feel they are always retaliated against, there is no goodwill. EU-China relations are not going well before the summit.”
China also announced that exporters who had agreed to a minimum export price would be exempt from anti-dumping duties. “The decision to accept price undertakings in this case once again demonstrates China’s sincerity in resolving trade frictions through dialogue and consultation,” a MOFCOM Spokesperson said. “It is hoped that the EU side will move in the same direction, strengthen dialogue and communication, jointly resolve economic and trade differences, and create favorable conditions for consolidating and expanding China-EU economic and trade cooperation.”
While expressing dismay at China’s announcement of the tariffs, French cognac makers acknowledged that the tax exemptions offered to companies that committed to a minimum export price could help the industry avoid a worst-case scenario. “This decision marks the end of the anti-dumping investigation, but not the end of our efforts to ensure that all of our exporters regain unimpeded access to the Chinese market as quickly as possible,” said Florent Morillon, President of the Bureau National Interprofessionnel du Cognac, France’s leading representative for the cognac industry. Smaller producers who did not sign on for the price floor, and those focusing on the lower price markets, will feel most of the impact of this decision, Guilhem Grosperrin, Director of the Grosperrin family brand, told the South China Morning Post.
