Trade tensions between Beijing and Brussels. China announced on Monday the imposition of “temporary anti-dumping measures” on brandies (wine-based spirits) imported from the European Union (EU), of which cognac accounts for 95% of the total.
It was not immediately clear on Monday whether these measures, which will be imposed from Friday, were new or an extension of existing ones. Since October 11, China has already asked European brandy importers to lodge a deposit with Chinese customs, as part of an anti-dumping investigation.
“The investigating authorities (on European brandies) have decided to implement temporary anti-dumping measures in the form of a bond or letter of guarantee,” China’s Ministry of Commerce said in a press release on Monday.
A text with almost identical wording was published by this ministry on 8 October and led to the adoption of the measures three days later. Monday’s press release, billed as an “additional announcement,” does not specify when these new temporary measures will expire.
Retaliatory measure
This anti-dumping investigation is widely seen as a retaliatory measure after the European Commission adopted a regulation in October imposing additional customs duties on electric cars imported from China, which it accused of unfair competition. A measure that had the strong support of France.
In France, the cognac interprofessional association believes it has been “sacrificed” by the government for the benefit of the automotive industry. A French diplomatic source strongly denounced these Chinese measures at the end of October, the “political nature of which is evident”.
The imposition of customs surcharges on cognac could have devastating effects on the sector and block this product’s access to the Chinese market. “We are ready to take all possible technical and legal measures” if necessary, the French Minister of Foreign Trade, Sophie Primas, indicated last week. However, he stressed that negotiations with Beijing on cognac remain “clearly open.”
In addition to brandies, China is also conducting anti-dumping investigations against pork and dairy products imported from the EU, posing a threat to these sectors.
Interview: Time.news Editor with Trade Relations Expert on China-EU Tensions over Brandy Imports
Time.news Editor: Welcome to Time.news! Today, we’re diving into the recent trade tensions between China and the European Union, particularly focusing on the new anti-dumping measures imposed on European brandies. With us is Dr. Maria Liu, a trade relations expert. Thank you for joining us, Dr. Liu!
Dr. Maria Liu: Thank you for having me! It’s great to be here.
Editor: Let’s get right into it. China has announced “temporary anti-dumping measures” on brandies imported from the EU, which predominantly affects French cognac. Could you explain the implications of these measures?
Dr. Liu: Certainly. Anti-dumping measures are typically implemented to protect domestic industries from foreign competition that is selling goods at below market value. In this case, China seems to be targeting European brandies to shield its own burgeoning spirits market. This is particularly significant given that cognac represents 95% of European brandy exports to China.
Editor: That’s a significant number. What led to these measures, and do you think they are an extension of previous actions or something entirely new?
Dr. Liu: The situation is a bit murky. Since early October, China has been asking European importers to pay deposits as part of an anti-dumping investigation. The announcement is somewhat ambiguous about whether these measures are new or an extension. Often, such measures are a strategic move during ongoing investigations to apply pressure on the foreign exporters.
Editor: The Chinese Ministry of Commerce mentioned temporary measures in their press release. How temporary can we expect these actions to be, based on past experiences?
Dr. Liu: That’s an excellent point. The term “temporary” can be misleading. In trade cases, temporary measures can last for several months while investigations are ongoing, sometimes extending for years depending on the complexity of the case. The failure to specify an expiration date in the latest announcement raises concerns about the potential for these measures to become prolonged.
Editor: It sounds as though this could escalate. Historically, how have such trade tensions impacted the spirits market and broader trade relations?
Dr. Liu: Trade tensions can have a domino effect. Past instances, like those seen with tariffs on American wines or metals, have not only impacted prices but also led to shifts in consumer behavior and sourcing. For cognac producers, these measures could limit their market access in China—one of the biggest markets for cognac outside France—leading to financial losses and even shifts in branding strategies. On a broader level, such measures often exacerbate diplomatic tensions between countries.
Editor: Given that context, what do you believe the EU’s response will be?
Dr. Liu: The EU has been proactive in defending its interests in past disputes. Expect a multifaceted response; they may pursue negotiations to mitigate the impact of these measures and explore legal avenues through the World Trade Organization (WTO). Moreover, they might also look to strengthen trade ties with other regions as a counterbalance.
Editor: This is a pivotal moment for international trade relations. Are there any silver linings to this situation for EU exporters?
Dr. Liu: It’s possible. Such challenges often spur innovation and diversification. European producers might look to expand in other markets or shift their strategies to adjust to the new realities. Additionally, if the EU gathers strong support and successfully defends their interests, it may establish a precedent that strengthens their bargaining power in future negotiations.
Editor: Thank you, Dr. Liu! This has been incredibly insightful. It seems we all need to keep a close watch on how this situation unfolds.
Dr. Liu: Absolutely. The implications of such trade measures can be far-reaching. Thank you for having me!
Editor: Thank you to our viewers for tuning in to this discussion. Stay connected with Time.news for updates on this evolving story.