China said on Tuesday it would impose provisional tariffs on cognac imported from the European Union, marking the latest salvo in an escalating trade row between Beijing and Brussels.
The two are important economic partners but have feuded in recent months over Beijing’s generous subsidies to its domestic industries.
Brussels argues that the aid undermines the principle of free competition and has helped drive down the prices of Chinese exports, undermining European competitors.
Beijing has denied the claims and accused Brussels of protectionism.
China launched an investigation into EU brandy this year, months after the bloc launched an investigation into Chinese subsidies for electric vehicles.
Beijing said in August it would not impose provisional tariffs on brandy producers even if it found evidence of dumping, but did not rule out further measures.
From Friday, operators will have to pay a “corresponding guarantee” to Chinese customs when importing EU brandy into the country, the Ministry of Commerce in Beijing said.
It said the amount would be based on calculations regarding prices approved by customs, as well as import taxes.
The investigation had “preliminarily determined that imports of certain brandies originating in the European Union were being dumped, threatening significant damage to the domestic brandy industry,” the ministry said.
It said the investigation also “demonstrated a causal link between the dumping and the threat of significant injury”.
The ministry released a list of the rates each company expects to pay, ranging from 30.6 percent for cognac house Martell to 39 percent for Jas Hennessy and 38.1 percent for Remy Martin.
Shares of French spirits giants Remy Cointreau and Pernod Ricard fell sharply in Paris on Tuesday following the news.
-Exchanging blows-
The European Union said on Tuesday it would try to challenge the new measures announced by Beijing.
“The European Commission will challenge before the World Trade Organization the announced imposition of provisional anti-dumping measures by China on imports of cognac from the EU,” said the commission’s trade spokesman, Olof Gill.
“We believe these measures are unwarranted, and we are committed to defending EU industry against abuse of trade defense instruments,” Gill added in a statement.
French cognac makers on Tuesday called for an end to the escalating trade war between the EU and China, warning that the latest measures threaten the sector.
“We call on our government to finally take the necessary steps to put an end to this escalation, of which we are the hostages,” the National Interprofessional Bureau for Cognac (BNIC) said in a statement co-signed by other spirits makers and exporters. .
The BNIC said it had not yet received details of the new rules, but the announcement sent an “additional signal” that China planned to introduce further taxes.
“We will already have to pay money” for the guarantee, as the largest cognac exporters already have their own import branches in China, said Raphael Delpech, director general of the BNIC.
Later Tuesday, the commission said it would “examine all options to provide appropriate support to EU producers” facing a negative impact.
“We have tools at our disposal to address the harmful impact on EU producers from situations of market disruption, or the threat thereof,” the report said in a statement.
– Additional rates –
China imported more cognac than any other spirit in 2022, most of it from France, according to a report by research group Daxue Consulting.
French President Emmanuel Macron thanked his Chinese counterpart Xi Jinping in May for not imposing customs duties on French cognac and presented him with bottles of the expensive drink.
However, the European Union last week gave the final green light to impose additional tariffs of up to 35.3 percent on electric cars imported from China, saying Beijing has unfairly subsidized its domestic industry at the expense of European carmakers.
Brussels is also investigating Chinese subsidies for solar panels and wind turbines.
Beijing has in turn launched an investigation into EU subsidies for certain dairy and pork products imported into China.
Asked about the cognac measures and those investigations, China’s Commerce Ministry said Tuesday that the investigations were conducted in accordance with the law.
A spokesperson reiterated that Beijing is “considering measures such as raising tariffs on imported large-displacement vehicles,” referring to cars with larger engines that tend to produce more emissions.
“China will take all necessary measures to firmly protect the legitimate rights and interests of Chinese industries and enterprises,” the spokesperson said.
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