LONDON (Reuters) – Beijing said on Thursday it would not impose provisional tariffs on brandy imported from the European Union despite finding it had been sold in China below market prices, giving both sides room to breathe in tense trade talks.
The statement left open the possibility of future action after its commerce ministry said it had found European distillers had been selling brandy in China at a 30.6%-39% margin, and that its domestic industry had been damaged.
Here are some reactions to the news:
FRENCH COGNAC ASSOCIATION BUREAU NATIONAL INTERPROFESSIONNEL DU COGNAC
“We understand that the duties that could be applied to our products at the end of the procedure would average 34.8%. If imposed, such duties would heavily impact cognac exports to China, a market that alone accounts for 25% of our exports.
“An entire sector would thus become the collateral victim of a conflict beyond its control … We expect France and the European Union to immediately negotiate for the non-application and abandonment of these duties.”
PERNOD CEO ALEXANDRE RICARD
“We are disappointed because we reaffirm that nothing in Pernod Ricard’s activities can be equated with dumping. We have always cooperated, in full transparency, with the current investigation and will naturally continue to do so until it has been completed.”
REMY COINTREAU
“This decision comes despite… Remy Cointreau’s demonstration throughout the process of full compliance of its products and business practices with both Chinese and international regulations as well as the absence of dumping.
“Remy 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 financial decision.”
EU COMMISSION
“According to the Commission’s detailed assessment, the merits of this investigation are questionable, and it does not meet the conditions for initiation.
“The Commission will therefore follow the investigation carefully to ensure WTO rules are being followed… and will not hesitate to take all necessary actions to defend EU exporters.”
EUROPE DIRECTOR GENERAL ULRICH ADAM
“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… 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.
“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.”
BARCLAYS ANALYST LAURENCE WHYATT
“This looks like a negotiation tactic from China… Can they persuade the EU to roll back some of the measures that have been imposed?”
BERNSTEIN ANALYST TREVOR STIRLING
“The short-term threat has gone away, but there is still a risk that the government does impose tariffs. But clearly that’s directionally positive.
“Pernod Ricard had about 10% of sales coming from China last year. Remy Cointreau was about 25%. So particularly for Remy, this would have been a big issue, a big threat if it had gone through.
“There’s clearly a… complicated set of interactions at the moment between the EU and China… The core of it is the EV tariffs, and cognac and dairy are potential collateral damage in the process.”
(Compiled by Josephine Mason; Editing by Tomasz Janowski, Jan Harvey and Barbara Lewis)
