China will not impose anti-dumping measures on EU brandy, for now
This comes as it canvasses the European bloc to reject a proposal to adopt additional duties of up to 36.3% on Chinese-made EVs
BEIJING said on Thursday (Aug 29) 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 European distillers had been selling brandy in its 1.4 billion-strong consumer market at a margin in the range of 30.6 per cent to 39 per cent, and that its domestic industry had been damaged.
“Provisional anti-dumping measures will not be taken in this case for the time being,” the commerce ministry 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 per cent on Chinese-made electric vehicles (EVs) in an October vote.
The decision not to impose tariffs on brandy could be seen as helpful to China’s case.
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“This looks like a negotiation tactic from China,” Barclays analyst Laurence Whyatt said, expecting to see a link between EU tariffs on Chinese EVs and Chinese action on EU brandy imports.
The European Commission said it had noted Beijing’s announcement and was following the investigation “very closely”.
The EU executive also said its detailed assessment showed the merits of the investigation were “questionable”.
“The commission will therefore follow the investigation carefully to ensure WTO rules are being followed... and will not hesitate to take all necessary actions to defend EU exporters,” a statement from the EU said.
EU-China’s broader trade row
France was seen as the target of Beijing’s brandy probe due to its support of tariffs on China-made EVs. It also accounted for 99 per cent of China’s brandy imports last year.
Eurostat data showed that French exports of dairy products to China that is under investigation by Beijing totalled 145 million euros (S$209.3 million) last year. This represents about half of the EU’s total.
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 per cent. If imposed, such duties would heavily impact Cognac exports to China, a market that alone accounts for 25 per cent of our exports,” the association said.
“An entire sector would thus become the collateral victim of a conflict beyond its control. We expect France and the EU to immediately negotiate for the non-application and abandonment of these duties,” it added.
Shares in French spirit makers jumped about 8 per cent after the announcement, though later pared gains as the market digested the full statement.
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”, but did not elaborate further.
Spokespeople for Pernod and Remy Cointreau did not immediately provide comments.
Beijing announced its anti-dumping probe on EU brandy in January. Cognac makers have maintained from the outset that the probe is linked to a broader trade row rather than the liquor market.
Besides 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 US$211 million worth of the targeted products, mostly milk and cream. REUTERS
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