EU Files Complaint at WTO Over China’s Cognac Tariffs

Duties on European liquors are widely viewed as targeting France, the main backer of imposing additional duties on electric vehicles made in China.

A woman walks past wines displayed in a case at a wine expo in Beijing on June 6, 2013. Wang Zhao/AFP via Getty Images

The European Union (EU) has moved forward with a complaint at the World Trade Organization (WTO) that alleges China improperly imposed preliminary tariffs on the bloc’s brandies.

“China has not proven that there is any threat of injury to its brandy industry, nor that there is a causal link between the alleged threat of injury and imports of brandy from the EU,” the European Commission said in a Nov. 25 statement, adding that the initiation of the case was based on “insufficient evidence.”

Beijing on Oct. 8 announced it would impose temporary custom duties on brandies shipped from the EU, in a trade case that France described as “a pure retaliation“ of the bloc’s tariffs hike on electric vehicles (EVs) made in China.

China’s commerce ministry accused the EU of dumping beverages in the Chinese market, alleging that it caused damage to its domestic market. The ministry requires importers to pay what they call a deposit ranging from 30.6 percent to 39 percent to Chinese customs when shipping brandies from the European Union. These measures went into effect on Oct. 11.

EU trade chief Valdis Dombrovskis pledged to safeguard the bloc’s beverage industries from the Chinese regime’s “misuse” of trade measures.

“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,” Dombrovskis wrote in a statement on Nov. 25.

“The EU takes very seriously any unfair or questionable use of trade defence instruments against any sector of our economy. ”

In response to the announcement, China’s commerce ministry said it had received the consultation request from the EU and will address the case in accordance with WTO regulations.

In a statement on the ministry’s website, an unnamed official reiterated Beijing’s stance, saying its anti-dumping measures are “in accordance with Chinese law,” were taken “at the request of domestic industries following a fair and impartial investigation,” and represent “legitimate trade remedies fully in line with WTO rules.”

“China has the responsibility to safeguard the legitimate demands and interests of domestic industries,” the official stated.

Beijing’s scrutiny of European liquors was initiated in January, two months after Brussels formally opened an investigation into China’s state subsidies of its EVs.

The Chinese duty on brandy imports is expected to hit France the hardest, particularly for luxury products such as Cognac and Armagnac, which account for more than 95 percent of European brandy exports to China, according to the Bureau National Interprofessionnel du Cognac (BNIC), a leading industry group in France.

In 2023, France exported 32 million bottles of Cognac to China, making it the second-largest market after the United States, according to BNIC data.

The BNIC has repeatedly urged the French government to engage in diplomatic discussions with Beijing. “Chinese investigation is not a legal problem but a political one, to which only a political response can be found,” BNIC said in a Nov. 12 statement.

A French delegation led by junior trade minister Sophie Primas visited Shanghai earlier this month to address China’s duties on brandy imports.

During a Nov. 19 meeting on the sideline of the Group of 20 summit in Brazil, French President Emmanuel Macron also urged Chinese leader Xi Jinping to lift the tariffs on brandy. As part of the efforts to resolve the trade issue, Macron told reporters after the meeting that he had asked Michel Barnier, France’s newly appointed prime minister, to travel to China early next year.

France is a main supporter of the European Commission’s tariff proposals on Chinese EVs, with Macron advocating for these measures as a means of ensuring fair competition between European and Chinese automakers. The commission has enacted tariffs of up to 35 percent—on top of the standard 10 percent tariff—on Chinese EVs after its investigation found that the Chinese industry has been heavily subsidized by the regime.