SHANGHAI--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 dumping margin in the range of
30.6% to 39% and that its domestic industry had been damaged. "Provisional anti-dumping
measures will not be taken in this case for the time being," the ministry said, leaving open the
possibility Beijing may act 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.
"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. "Can they persuade the EU to roll back some of the measures that have been
imposed?"
An EU Commission spokesperson said the development would not influence its decision on
EV duties, describing the two investigations as "separate tracks". In a statement, the EU
executive said it was following the investigation "very closely" while 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,"
the statement said.
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% of China's brandy imports last year.
French exports to China of dairy products that Beijing is investigating totalled 179 million
euros ($198 million) last year, about 35% of the EU's total, according to Eurostat.
French cognac association Bureau National Interprofessionnel du Cognac (BNIC) said
China's provisional decision did not put its concerns about eventual tariffs to rest. Duties if
imposed would "heavily impact" cognac exports to China, which accounts for a quarter of its
exports, it said.
