China places preliminary antidumping duties on European brandy in October 2024.

Context

In January 2024, China’s MInistry of Commerce (MOFCOM) initiated an investigation into brandy producers in the European Union. MOFCOM imposed preliminary antidumping duties of between 30.6% and 39% in August 2024.

French Cognac producers made public their concerns that was retaliation for the decision of the European Union to impose tariffs on Electic Vehicles (EVs) from China. One French sectoral analyst has argued that the measure “highlights Beijing’s intent to redirect local markets toward domestic brands while leveraging tariffs as a political and economic tool.” 

Impact

As the measure is relatively new, it is too soon to directly assess its full impact impact, however exports reportedly dropped by 70% in Nocember 2024. Reuters has forecast that the duties “would leave French companies with vast amounts of cognac that could be hard to sell elsewhere,” as the Chinese market was worth nearly 20% of exports in 2023.

Responses

(i) China

In April 2024, the Chinese Minister of Commerce stated that the investigation “was initiated at the request of the domestic industry and is not targeted at any specific EU countries. “

(ii) France

In November 2024, the French Cognac association urged the French government to put pressure on the European Union to delay the vote on EVs, stating that “[d]espite the ongoing harvest, our sectors remain fully mobilized on an issue in which they are being held hostage and upon which their future depends.”

(iii) Australia

There are some clear comparisons between this case study and that of Australia- China wine dispute, although some analysts have commented that the EU dispute appeared ‘less serious‘ than that of Australia.

WTO Dispute

On 29 November the European Union filed a formal request for consultations with China at the WTO, as a precursor to a potential dispute for adjudication by the WTO.

Status

As of December 2024, the Chinese Government has delayed the final antidumping decision until April 2025.

References & Further Information

Polac, A. (2024) “Chinese Brandy: Rising against French Cognac” https://www.sirhafood.com/en/chinese-brandy-rising-against-french-cognac

Rumney, E. (2024) “France’s cognac exports to China could be hit like Australian wine” Financial Review https://www.afr.com/world/europe/france-s-cognac-exports-to-china-could-be-hit-like-australian-wine-20240506-p5fpd7