China Hits EU Brandy with New Duties

The Chinese Ministry of Commerce announced on Monday, November 11, an update to the provisional anti-dumping measures on brandy imported from the European Union. The new regulations will take effect starting Friday, November 15. This decision comes after recent discussions between technical teams from the European Union and China, which reportedly made some progress toward resolving issues related to import tariffs on Chinese electric vehicles. Despite these talks, the imposition of the updated measures was not averted.

According to the official statement from China's Ministry of Commerce, European brandy importers will be required to pay security deposits at Chinese customs. These deposits will be calculated based on dumping margins ranging from 30.6% to 39%, effectively raising the import costs of European brandy. The measures will mainly impact French brandy exports, which constitute a significant portion of the European spirits market in China.

The requirement for security deposits had been anticipated since October. Still, Chinese authorities had previously shown reluctance in August to proceed, even after preliminary findings indicated that European producers were selling brandy in China at significantly lower market prices. This practice, labeled as dumping, has been under investigation since January 5. The investigation's preliminary results revealed a potential threat to the domestic brandy industry, justifying the government's regulatory intervention.

In July, the Ministry of Commerce conducted an analysis to assess the impact of European brandy imports on the local industry and the economic implications of these measures for both Chinese consumers and producers. The review was part of a broader strategic response to growing pressure from the European Union, which has been enforcing its own restrictive measures against certain Chinese products. These trade tensions have unfolded amid the EU's imposition of tariffs on Chinese electric vehicles, a sector heavily supported by government subsidies.

China remains a crucial market for European brandy producers, particularly for French exporters. Behind this latest move, Beijing has also initiated anti-dumping investigations into other European products, including dairy and pork. These actions are seen as part of an ongoing exchange of trade tensions in response to European policies. The European Commission, following an investigation into state subsidies for Chinese electric vehicle manufacturers, decided to raise customs duties, a measure endorsed by France but met with a more moderate and divided stance from Germany. The lack of consensus within the EU highlights differing national interests in managing trade relations with China.

The evolution of these measures and upcoming trade negotiations will play a critical role in shaping the economic dynamics between China and the European Union. Affected industries must now navigate an increasingly complex trade landscape, marked by ever-changing regulations and persistent geopolitical friction.