China makes European brandy costlier at home, raises tariff up to 39% in a tit-for-tat

Chinese drinkers may pay more for Remy Martin and other European brandies after the government announced on Tuesday provisional tariffs of 30.6 per cent to 39 per cent on those liquors, four days after a majority of European Union countries approved duties on electric vehicles made in China.

The tit-for-tat move potentially gives Chinese negotiators leverage in talks with the EU on reducing or eliminating the tariffs of up to 35.3 per cent on Chinese EVs, which would take effect at the end of this month.

The brandy tariffs are provisional and require importers to make a deposit with the Chinese customs agency for the amount of the tariff, starting Friday.

The announcement followed a preliminary finding by China’s Commerce Ministry in late August that European brandy was being dumped in China, threatening “substantial damage” to domestic producers.
China has opened a series of anti-dumping investigations into European brandy, pork and dairy products as a now year-old EU investigation into Chinese EV exports has progressed through various stages.

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The brandy probe was the first and targeted mainly French makers of cognac and similar spirits such as Armagnac. France has supported the investigation into Chinese-made EVs, while Germany, whose automakers fear retaliation in the Chinese market, has opposed it.

China is studying whether to raise tariffs on imported cars with large engines, a Commerce Ministry spokesperson confirmed Tuesday in an online report from state broadcaster CCTV.

The provisional tariffs on brandy vary by brand, similar to the EU duties on electric cars made in China. For example, Martell products face a 30.6 per cent tariff versus 38.1 per cent for Remy Martin and 39 per cent for Hennessey. The tariffs are being imposed on dozens of companies, including some Spanish makers.
French President Emmanuel Macron presented Chinese leader Xi Jinping with two bottles of cognac when the two exchanged gifts during Xi’s state visit to France in May.

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In a statement, the European Commission accused China of abusing the rules governing world trade and said that it would help its producers to weather the impact of the measures".

The EU takes with utmost seriousness any unfair use of trade defense instruments against any sector of our economy,” said the commission, which manages trade on behalf of the 27 member countries.

“Abuse of trade defense for inappropriate reasons is a clear breach of WTO rules,” it said, and warned that it would “robustly challenge” the move at the World Trade Organization.

“In parallel, the commission will now carefully identify and assess all possibilities to offer appropriate support to EU producers facing the negative impact of this unwarranted decision by the government of China,” it added.

(Except for the headline, this story has not been edited by Firstpost staff.)