China, France seek resolution on brandy tariffs as trade talks continue

China and France have agreed to resolve their escalating trade tensions through dialogue, Beijing’s foreign ministry said Friday, offering cautious optimism for a deal on punitive Chinese tariffs targeting European brandy, particularly French cognac.

The announcement follows high-level talks this week between Chinese Commerce Minister Wang Wentao and French Trade Minister Laurent Saint-Martin on the sidelines of an OECD conference in Paris. Technical discussions have also been underway in Beijing, where Chinese officials reportedly signaled a willingness to settle the dispute, though some sticking points remain.

The latest round of negotiations have raised hopes of a settlement, two industry sources with knowledge of the discussions said.

”The two sides have reached consensus on resolving economic and trade issues through dialogue and consultation”, the Chinese foreign ministry said after a call between the Chinese and French foreign ministers.

Beijing imposed anti-dumping duties of up to 39% on European brandy earlier this year — measures widely seen as retaliation for EU tariffs targeting Chinese electric vehicle exports. France, the leading cognac producer, has been most affected, with major players like LVMH’s Hennessy, Pernod Ricard’s Martell, and Rémy Cointreau experiencing a decline in sales to China, their most valuable export market in terms of revenue.

China had initially set a final decision on the duties for January, but has extended the deadline twice, now pushing it to July 5.

Beijing was initially meant to make a final decision on the duties by January, but extended the deadline to April and then again to July 5.

China is seeking to strengthen trade ties with the 27-member bloc as relations with the United States have soured in the escalating trade war.

”France will not compromise on … the protection of its industries, such as cognac,” French trade minister Laurent Saint-Martin said after talks with Wang on Wednesday.

Chinese officials, meanwhile, signalled to industry officials during three rounds of technical meetings in Beijing this week they wanted to settle the matter, one of the sources said, but added some sticking points remained.

With annual imports of around $1.7 billion last year, China is the French brandy industry’s most important measured by value and the second-largest by volume after the United States.

With inputs from agencies