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China threatens 34.8% duty on EU brandy
The Chinese Ministry of Commerce (MOFCOM) will not apply anti-dumping measures on EU brandy and Cognac ‘for the time being’.
China is currently holding an anti-dumping inquiry into EU Cognac and brandy.
Dumping is when a company sells a product in a foreign market at a price that is lower than the price it charges in its home market. The practice is considered unfair as the price in the overseas market would not reflect the true value of the product.
A delegation of European producers and businesses attended a hearing with MOFCOM last month (July) to address dumping concerns related to EU Cognac and brandy.
In June, MOFCOM said it would announce its tariffs by the end of August. It has now provisionally confirmed that tariffs will average 34.8% if dumping is found to have occurred, however no duties will be applied yet.
Spirits Europe director general Ulrich Adam said.“We are very disappointed by this announcement. The tariffs, if applied, would constitute an unjustified market access barrier and have a detrimental impact on EU exports of wine-based and marc-based spirits to China, which represent the lion’s share (around 90%) of direct EU spirits exports to China in value.
“This decision is all the more incomprehensible because our sector has fully cooperated with the Chinese authorities throughout the entire investigation process initiated in January 2024 and has demonstrated complete transparency in its practices. The only silver lining at this stage is that the provisional duties will not apply for now.
“The evidence the brandy sector provided throughout the investigation demonstrated that the conditions for initiating an investigation were not met. In contrast, the evidence of dumping, injury, and causal link provided in the application was insufficient to justify the initiation of an investigation.
“Our sector seems to be a collateral victim of a broader trade conflict, which will limit the access of Chinese consumers to products they greatly value and appreciate, if not resolved as a matter of priority.”
The inquiry is expected to conclude before 5 January 2025.
Remy Cointreau, which produces Rémy Martin and Louis XIII Cognacs, released a statement following the announcement: “This decision is described as ‘preliminary’ and is not accompanied by ‘provisional measures’, which means that the final tariffs to be announced at the end of the investigation may differ from those just announced, or may not be applied.
“At this stage, Rémy Cointreau is obliged to await MOFCOM’s final decision to be able to assess any potential future impact.
“Rémy Cointreau intends to continue cooperating fully with the Chinese authorities until the investigation has been completed. At the same time, the group is continuing to assess all options and growth opportunities that will enable it to mitigate any negative fallout from MOFCOM’s final decision.
“China is a long-standing trading partner for the Louis XIII and Rémy Martin brands, which have enjoyed a strong presence and strong desirability in the country for many decades. The group will thus continue to invest there to prepare for tomorrow’s growth.”
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