The trade dispute between the EU and China took a new turn today, as Beijing announced the imposition of new duties on brandy imported from the bloc.
China’s commerce ministry has stated that importers of the spirit will be required to pay a security deposit starting from Friday (11 October), according to the FT. It is not clear from the announcement when importers would be able to claim back the deposits.
Provisional tariffs will apply at a rate of 30.6% to 39%, the Independent notes.
Low spirits
The announcement sparked an immediate hit to the share value of major French drink firms, including Rémy Cointreau and Pernod Ricard. French brandy composed 99% of China’s brandy imports over the last year.
It follows EU approval of a hike on the tariffs imposed on Chinese electric vehicles (EVs) imported to the bloc, to which it is likely to be seen as a response.
The Chinese commerce ministry said in its statement that an investigation into alleged dumping of brandy by EU firms on the Chinese market poses a risk of “substantial damage” to the country’s domestic producers.
It added, however, that “China is [also] studying measures including raising the tariffs on imported gasoline cars with a large engine capacity”. As noted in the report on the tariffs by Reuters, that could have a particularly pronounced effect on German producers, who exported US$1.2bn in vehicles with 2.5l or larger engines to China last year.
‘Injurious subsidisation’
The EU stated last week that China would need to address the “injurious subsidisation” found by a European Commission investigation into China’s EV industry.
“The EU and China continue to work hard to explore an alternative solution that would have to be fully WTO-compatible,” it added, noting that any such solution would also have to be “monitorable and enforceable”.
The Chinese commerce ministry had suspended plans for the introduction of anti-dumping measures on EU brandy in August, despite its investigation finding that it had been sold at a dumping margin in the range of 30.6% to 39% in China, the Reuters report notes.
‘Muddling through’
Following last week’s vote to approve higher tariffs on Chinese EVs, one EU diplomat told the FT:
“I think we all know we’re going to face retaliation. There’s no joint strategy on China. We’re basically just muddling through.”
BMW chief executive Oliver Zipse, meanwhile, argued that the EU-China trade dispute would “severely slow down the fight against climate change”.
