French brandy makers sacrificial lambs in China-EU trade war
Pundits: France must pay heavy price for its crucial role in the European Union’s electric vehicle tariff action
China has decided to impose a provisional anti-dumping tariff on brandy imported from the European Union after the bloc voted for the imposition of a 7.8-35.3% tariff on Chinese electric vehicles.
The Chinese Ministry of Commerce said in a statement on Tuesday that it had reached a preliminary conclusion on August 29 that the brandy imports from the EU were being dumped in China’s market, posing a threat of substantial harm to the domestic industry.
It said the new tariffs will be imposed in the form of cash deposits, effective from Friday. The deposit rates are set at between 30.6% and 39%.
It stressed that the decision was made after it conducted an anti-dumping investigation against the EU’s brandy in accordance with Chinese laws and regulations, as well as the rules of the World Trade Organization (WTO).
It also said the anti-dumping and anti-subsidy probes into imports of pork and dairy products from the EU are still ongoing. It said it will make an objective and fair judgment after the investigations to ensure that all parties’ interests are fully protected.
China’s new provisional tariffs are expected to hit French brands from Hennessy to Remy Martin.
In 2023, France exported 165.3 million bottles of cognac to the US and 61.5 million bottles to China, according to the Bureau National Interprofessionnel du Cognac (BNIC), France’s Cognac governing body.
The BNIC said Tuesday that France will work with the EU to take action at the World Trade Organization level to protest against China’s brandy tariffs.
The Chinese ministry had said on August 29 that it would not impose provisional duties on EU brandy. At that time, Chinese and European officials were having final negotiations on the EV tariff issue with Beijing suggesting raising prices of its EVs to resolve the disputes.
But Beijing’s efforts to stop the EV tariffs were proven unsuccessful last week.
Blaming France
On October 4, five EU member countries, including Germany and Hungary, voted against the tariffs imposed by the European Commission on Chinese EVs, AFP reported, citing several unnamed European diplomats.
Ten member states including France, Italy and Poland voted for the EV tariffs while 12 countries including Spain and Sweden abstained.
Hildegard Mueller, president of the German Association of the Automotive Industry (VDA), said the tariffs on Chinese EVs mark a step back for global cooperation. He said China and the EU should continue negotiations and avoid further escalation and potential trade conflicts.
He praised the German government for having voted against the EV tariffs and firmly defended the interests of Europe and the German automotive industry.
“French auto firms such as Peugeot, Citroën and Renault had glory days in the Chinese market but now they only have a less than 1% market share in China,” a Jiangsu-based columnist using the pseudonym “Jianshiyijin” says in an article.
“The French auto firms and government want to boost the EV sector and sell 800,000 EVs annually by 2027,” he says. “It means that someone will have to lose market shares. That’s why China has become a scapegoat.”
“China can consider imposing extra tariffs on a wide range of French goods, from airplanes to agricultural and sideline products such as red wines,” he says. “France’s luxury products such as handbags, perfumes and clothings should also be targeted.”
Tried all means
“China has already tried all methods to avoid a tariff war with the EU,” a Zhejiang-based writer says in an article. “We don’t need to wallow in sadness and disappointment. Since the EU fired the first shot at us, it’s time to see how we can effectively fight back.”
He says the 10 EU member states that voted for the EV tariffs should be targeted by China’s retaliation, especially France.
“France had played a crucial role in approving the EV tariffs suggested by the European Commission,” he says. “As the saying goes, it’s better to cut off one finger of an enemy than to hurt all ten of his fingers while leaving them attached. Our retaliation should target France and make it pay a heavy price for its actions.”
He says China may consider imposing tariffs on French products including aircraft and related parts, red wines, dairy and pork products, cosmetics, cases and bags, jewelry, clothing and watches.
He says China should also retaliate against the abstaining EU member states as they failed to join hands and block the EV tariffs. He says China should give up hope that the EU can stay independent from the influence of the United States, which has already imposed a 100% tariff on Chinese EVs.
France’s total exports to China rose 6% to US$26.6 billion last year from US$25 billion in 2022, according to the United Nations Comtrade database on international trade.
Big engines
Meanwhile, Germany may not be able to get away from Beijing’s retaliatory measures although it voted against the EV tariffs imposed on China.
China’s Ministry of Commerce said Tuesday that it is considering increasing tariffs for imports of the EU’s cars with large engines. It said China will take all necessary measures to firmly safeguard the legitimate rights of China’s industries and companies.
Engines with displacement, or size of the combustion chambers, equal to or greater than 3,000 cubic centimeters or three liters are considered big engines.
If China raises tariffs on European cars with large engines, German automakers will be hit, some observers said.
Read: EU-China in last gasp bid to avoid EV-driven trade war
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