Oct. 8 (UPI) — The Chinese government on Tuesday announced it will be placing an anti-dumping tax on Brandy produced in the European Union that is imported into China.
China’s Ministry of Commerce said officials on Friday will begin collecting security deposits from companies that sell European-made Brandy. The security deposits would equal more than 30% of the products’ total value.
The announcement came days after the EU decided on Friday to move ahead with tariffs on China-made electric vehicles of up to 45%. The extra tariff could be as high as 35% and would come on top of the existing 10% rate.
“The relevant brandy industry within China has been substantially damaged or threatened,” China’s Commerce Ministry said Tuesday.
Late last year, China said it would not impose any “anti-dumping” actions after the Chinese government discovered that European distillers had allegedly been selling their products in Chinese markets at a margin of 30-39%.
“Dumping” is the practice of selling goods in another country at below-cost prices as a way of offloading excess supply or increasing market share.
The European Union tariffs on China were imposed with support from only 10 member EU states with the remaining 17 either abstaining or voting against.
On Friday, China said it was “strongly dissatisfied” with the EU’s choice to impose new duties on its domestically-produced electric vehicles, characterizing it as a protectionist act that is “unfair, non-compliant and unreasonable.”
Meanwhile, the European Commission — a separate EU body — said it would challenge the fresh measures at the World Trade Organization.
The EU tariffs on China’s EVs came a year after an EU probe was launched into whether Beijing had been subsidizing its own domestic producers and the impact on EV-makers in the EU.
Many EU states within the bloc had called on the European Commission to delay enforcing the tariffs as long as EU negotiating teams remained “actively engaged in discussions, striving to find viable solutions.”
China’s own anti-dumping investigation, however, is an apparent dig at France, which accounts for 99% of brandy exported to China, and is the world’s largest exporter of fine brandies such as Remy Martin and Hennessy.
French cognac lobby group BNIC claimed China’a newly-imposed duties would be “catastrophic” for the industry.
Paris allegedly played a central role in persuading the European Commission to launch its investigation in September. But multiple European officials, including France’s trade minister, believe China’s new move is in retaliatory.
“We believe that these measures are unfounded, and we are determined to defend EU industry against the abuse of trade defense instruments,” Olof Gill, an EU spokesperson for trade and agriculture, wrote in an emailed statement.
It is a “total contradiction with international trade rules,” French Trade Minister Sophie Primas told multiple news outlets.
The communist Chinese government is reportedly considering additional tariffs on other EU imports including cars, pork and dairy products.
Currently, China is seeing a downturn on cognac and brandy imports into the Chinese market. Import volumes for August were down 40% on a year-on-year basis, according to the UBS spirit tracker.
Beijing’s latest action saw it touch the financial markets too. Remy Cointreau dropped more than 8% and the high-end Moet Hennessy cognac was more than 3% lower.