China, duties on European brandy start tomorrow. But French giants are exempt

MILAN – China will impose "anti-dumping" duties on brandy imported from the European Union starting Saturday, thus increasing trade tensions between the EU and Beijing. In particular, the new duties on European brandy could reach 34.9%. At the same time, products that respect the price commitments made by some industry associations and companies in the European bloc will be exempted, the ministry said. In particular, the three large cognac producers — Rémy Cointreau SA, Pernod Ricard SA and Hennessy (LVMH) — are among the companies that have reached an agreement with China with a price commitment. Their exports to China, provided they are at a price no lower than the agreed one, will not be subject to anti-dumping duties.

An exemption that in fact greatly weakens the restrictiveness of the measure. In fact, French cognac accounts for 98% of total brandy exports, and the three French producers account for almost all of French cognac production.

The origin of the measure

Last year, Beijing launched an investigation into EU-produced brandy after European countries raised concerns about Chinese subsidies for electric vehicles. Following its investigation, Beijing reached a preliminary conclusion that dumping was taking place and imposed "temporary measures" on imports. The decision was made to implement the measures starting tomorrow, Saturday, July 5. "The investigation authority has finally determined that there has been dumping of the relevant brandy imported from the EU," the Commerce Ministry said in a statement. "The domestic brandy industry in question has been threatened with substantial damage and there is a causal relationship between the dumping and the threat." The levies will apply to brandy in containers of less than 200 liters, the ministry said. Specifically, Chinese authorities explained that the tax rate on French liquor giant Jas Hennessy will be 34.9%, Remy Martin will be hit with a 34.3% tax, while Martell will be taxed at 27.7%.