The Extended Probe Threatens to Strain EU-China Trade Relations Further
China’s Commerce Ministry has decided to extend its anti-dumping investigation into EU brandy by three months, bringing the investigation’s conclusion date to April 5, 2024. Originally launched on January 5, the probe is now set to continue longer due to the “complexity” of the investigation, the ministry explained in a brief statement. While the extension is shorter than the six-month period that could have been applied, the move still underscores the growing tensions between China and the European Union, particularly France, one of the largest exporters of brandy to China.
The anti-dumping investigation into EU brandy was triggered by allegations that European producers were exporting brandy to China at unfairly low prices, a practice known as “dumping.” Preliminary findings from the probe, released in October, suggested that this dumping could harm China’s domestic brandy industry. As a result, China imposed temporary tariffs on EU brandy imports, significantly impacting French producers like Hennessy and Remy Martin. These measures include a 40% security deposit for importers of brandy from the EU, making it considerably more expensive to import the popular beverage.
Escalating Trade Tensions Between Asian and France Over Brandy Imports
The extended investigation into EU brandy comes at a time when France and China are already embroiled in trade disputes, particularly over tariffs on Chinese electric vehicles. French President Emmanuel Macron had previously described the investigation as “pure retaliation” in response to France’s support of EU tariffs on Chinese-made electric vehicles. The anti-dumping probe into EU brandy is seen as another layer of tension between the two countries, with French officials accusing China of using trade measures for political leverage.
French officials have strongly opposed the Chinese tariffs, with France’s trade ministry calling the measures “incomprehensible” and arguing that they violate free trade principles. The anti-dumping investigation into EU brandy has thus become a flash point in the broader EU-China trade dispute. In response, the EU Commission has filed a complaint with the World Trade Organization (WTO), challenging China’s provisional anti-dumping measures. The dispute is now expected to enter the international legal arena.
Impact on French Brandy Exports and Global Trade Dynamics
For French producers, the extended probe into EU brandy is a significant concern. French brandy exports to China amounted to $1.7 billion last year, accounting for 99% of China’s total brandy imports. With the anti-dumping investigation into EU brandy and the resulting tariffs, French exporters face a considerable increase in the cost of doing business in China, potentially losing their foothold in the lucrative market.
The dispute highlights the broader trade tensions between China and the EU, with both sides increasingly turning to protectionist measures to safeguard their economic interests. As the anti-dumping investigation into EU brandy continues, the world is watching to see how China and the EU will resolve this contentious issue. Will the WTO’s involvement help ease the tension, or will the trade disputes escalate further?
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