China spared major cognac producers Pernod Ricard, LVMH and Remy Cointreau from new duties of up to 35 percent on EU brandy announced yesterday, provided they sell at a minimum price.
The Chinese Ministry of Commerce issued its final ruling following an investigation into brandy originating from the EU, most of it cognac from France, launched last year.
Duties of up to 34.9 percent for a period of five years starting from today would be levied on those without minimum price commitments or those that breached promised minimums, the ministry said in a statement. It did not disclose the minimum prices.
Photo: Reuters
The ministry would also give back deposits made by brandymakers since October last year, when provisional duties were imposed. The refund issue, which weighed particularly heavily on smaller producers, was one of the sticking points in months-long negotiations, two industry sources said.
Remy Cointreau said in a statement that the deal on minimum price commitments constituted “a substantially less punitive alternative,” thus enabling “the strengthening of some investments in China.”
French cognac makers generate global exports of US$3 billion a year combined. They have complained they are collateral damage in a broader trade row between Brussels and Beijing over import tariffs imposed on China-made electric vehicles (EVs).
China imposed temporary anti-dumping measures last October of up to 39 percent on imports of brandy from the EU, including on French brands such as Hennessy and Remy Martin, after the EU accused Beijing of giving its auto industry unfair subsidies, and imposed duties on imports of Chinese-made EVs.
“The French government has been raising this repeatedly with the Chinese government and saying this is a major bone of contention,” a senior French industry source with knowledge of the China negotiations said, who declined to be named, because they were not authorized to speak to the media. “I think both sides, France and China, did not want this to get out of hand, they wanted to find a resolution.”
The Bureau National Interprofessionnel du Cognac (BNIC), a French cognac industry group, said that the deal for minimum price commitments would be “less unfavorable” than anti-dumping duties, but still worse for its members than the historical pre-investigation norm.
“This is why we renew our call to the French government and the European Commission to reach a political agreement with Chinese authorities as soon as possible to return to a situation without anti-dumping duties,” BNIC said in a statement.
Monthly cognac exports to China, the world’s most valuable market for the spirit, have fallen by as much as 70 percent due to the trade dispute, BNIC data showed.
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