By Casey Hall and Emma Rumney
SHANGHAI (Reuters) – Beijing said on Thursday it would not impose provisional tariffs on brandy imported from the European Union despite finding it had been sold in China below market prices, giving both sides room to breathe in tense trade talks.
China’s commerce ministry said in a statement it had found that European distillers had been selling brandy in its 1.4 billion-strong consumer market at a margin in the range of 30.6% to 39.0% and that its domestic industry had been damaged.
“Provisional anti-dumping measures will not be taken in this case for the time being,” the statement said, leaving open the possibility Beijing may act at some time in the future.
Previously, the ministry had said the probe was expected to end before Jan. 5, 2025, but that it could be extended “under special circumstances”.
China has been canvassing the bloc’s 27 member states to reject the European Commission’s proposal to adopt additional duties of up to 36.3% on Chinese-made electric vehicles in an October vote, and the decision not to impose tariffs on brandy could be seen as helpful to its case.
France was seen as the target of Beijing’s brandy probe due to its support of tariffs on Chinese EVs. It also accounted for 99% of China’s brandy imports last year.
French cognac association Bureau National Interprofessionnel du Cognac said China’s provisional decision did not put its concerns about eventual tariffs to rest.
“We understand that the duties that could be applied to our products at the end of the procedure would average 34.8%. If imposed, such duties would heavily impact Cognac exports to China, a market that alone accounts for 25% of our exports,” the association said in a statement.
“An entire sector would thus become the collateral victim of a conflict beyond its control … We expect France and the European Union to immediately negotiate for the non-application and abandonment of these duties,” the statement added.
Shares in French spirit makers jumped about 8% after the announcement, though later pared gains as the market digested the full statement.
At 0901 GMT, Pernod Ricard traded 4.4% higher, Remy Cointreau was up 7.7% and Italy’s Campari was 1.68% higher after its shares were earlier automatically halted in Milan when the stock rose 4.5%.
China’s decision came as Pernod Ricard executives presented the company’s annual results to investors.
Chief Executive Officer Alexandre Ricard said the company would remain prudent on China given the tariff decision appeared to only apply “for now”. He declined further comment since he did not get a chance to review the news.
Spokespeople for Pernod and Remy Cointreau did not immediately provide comments.
Beijing announced its anti-dumping probe on EU brandy in January. Cognac makers say the probe is linked to a broader trade row rather than the liquor market.
As well as the brandy probe, Beijing has opened anti-subsidy investigations into dairy and pork products from the EU in recent months.
The dairy probe was launched last week, the day after Brussels published its revised tariff plan for Chinese-made EVs. France is also a major exporter of dairy to China and last year sent there $211 million worth of the targeted products, mostly milk and cream.
(Reporting by Joe Cash in Beijing, Casey Hall in Shanghai and Emma Rumney in London; Editing by Christian Schmollinger, Mark Potter and Tomasz Janowski)
Source Agencies
