The European Commission announced on Tuesday that it would challenge Chinese measures against cognac imports before the World Trade Organization (WTO). A new stage in an escalation of tensions between Europe and China, these were adopted after the EU’s decision to impose surcharges on electric cars manufactured in China. Enough to give a cold sweat to the cognac industry, of which China represents a major market.
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“ We believe that these measures are unfounded and we are determined to defend European industry against the abusive use of trade defense instruments. “said a spokesperson, Olof Gill. “ The European Commission will challenge at the WTO the announced imposition of provisional anti-dumping measures by the China on imports of cognac from the EU “, he explained.
The reason for this anger? From Friday, China will require importers of European brandies to post a deposit with Chinese customs. Note that cognac represents 95% of them. This security deposit will be debited retroactively if China formally decides to apply customs surcharges to compensate for competition deemed unfair by European brandy producers. The EU had applied the same mechanism in recent months, until member countries decided on Friday to validate these surcharges on electric vehicles imported from China. Trading houses have recently received “ notifications of tax intentions », indicated in September Florent Morillon, president of the French National Interprofessional Cognac Bureau (BNIC), specifying that they could be around 35% on average.
“We took appropriate and very proportionate decisions”
A decision which comes after the EU’s announcement to impose up to 35% additional customs duties on imports of electric cars imported from China. Their prices are considered artificially low by Brussels due to state subsidies which distort competition and harm the competitiveness of European manufacturers according to the EU. These measures come against a backdrop of rising tensions between China andEuropean Union (EU), an essential trading partner for the Asian giant.
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A situation faced by the European Commissioner for the Economy, Paolo Gentiloni, was calm: “ We are never worried », he said during a press conference in Luxembourg. The aim of EU measures against Chinese electric car imports is to restore a level playing field with manufacturers accused of profiting from massive public subsidies. “ We are reasonable. We carried out a serious investigation, (…) we took appropriate and very proportionate decisions, and I don’t think there is any reason to react to those proportionate decisions with retaliation “, affirmed Mr. Gentiloni.
The cognac industry is scared
In the wake of the announcement of the challenge before the WTO, the cognac inter-profession in France called “ put an end to the escalation to which we are hostage and whose outcome is today more threatening than ever » between Brussels and Beijing. The National Interprofessional Cognac Bureau (BNIC) was also alarmed: “ The French authorities cannot abandon us and leave us alone to face Chinese retaliation which does not concern us. The effect of these taxes would be catastrophic for our sectors and our regions “.
“ It is obvious that this is a direct and immediate response from the Chinese authorities to the decisions taken by Europe on October 4 in favor of taxing Chinese electric cars. », deplores the cognac inter-professional association, according to which China alone represents 25% of its exports. On the stock market, shares in the sector suffered: on Tuesday, Rémy Cointreau shares fell 6.37% to 61.75 euros around 7:25 a.m. UT, while Pernod Ricard lost 3.12% to 127.35 euros.
The cognac appellation, which brings together 4,400 farms, 120 professional distillers, 270 traders and represents 15,000 direct jobs – 70,000 indirect in France – is already suffering from a fall in sales (-22% in volume in 2023).
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