The EU has initiated a World Trade Organization (WTO) case against China's tariffs on the bloc's brandy exports, which are proving a hot political issue in France.
The move follows China's imposition of “anti-dumping measures” ranging from 30.6% to 39% on EU brandies in response to the European Commission's duties on Chinese electric vehicles.
On 4 October, the EU approved tariffs of up to 45% on imported China-made EVs. Beijing claims its measures against EU brandy imports are to prevent dumping in China. It argues China’s domestic distilled wine industry was “threatened with substantial damage”.
The dispute has sparked concern in France, where the country's makers of Cognac count China as a key export market.
A formal request by the EU for consultation was lodged at the WTO in Geneva today (25 November), marking the first step in the organisation's dispute settlement process.
In a statement, the Commission said: “China's provisional measures on EU brandy are not in line with WTO rules” adding it “has not proven that there is any threat of injury to its brandy industry”.
Furthermore, the Commission believes the case was initiated by China based on “insufficient evidence”.
Beijing has ten days to respond. If consultations fail, the matter may proceed to a disputes panel, potentially taking years to resolve if appealed.
EU executive vice-president and commissioner for trade Valdis Dombrovskis said: “The EU takes very seriously any unfair or questionable use of trade defence instruments against any sector of our economy.
“By requesting consultations with China over its provisional anti-dumping measures on EU brandy, the Commission is following through on its commitment to protect our industry from unfounded accusations and misuse of trade defence measures.”
Last week, it emerged Hennessy Cognac brand owner LVMH Group was considering a trial to bottle its products in China.
The company's admission sparked a strike at Hennessy’s headquarters in Cognac. A further demonstration outside the Bureau National Interprofessionnel du Cognac (BNIC) has been set for this Thursday.
The BNIC representative body acknowledged the planned demonstration and said it would engage with union representatives for talks.
