China to impose duties of up to 35% on EU brandy, spares major cognac makers
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Some companies that had made minimum price commitments will be spared the higher tariff rate.
PHOTO: REUTERS
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SHANGHAI - China spared major cognac producers Pernod Ricard, LVMH and Remy Cointreau from new duties of up to 35 per cent on EU brandy announced on July 4, provided they sell at a minimum price.
China’s Commerce Ministry issued its final ruling following an investigation into brandy originating in the European Union
Duties of up to 34.9 per cent for a period of five years starting from July 5, 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.
China’s Commerce Ministry will also give back deposits made by brandy makers since October 2024, 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 Martin-owner 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 (S$3.8 billion) a year combined. They have complained
In October 2024, China imposed temporary anti-dumping measures of up to 39 per cent on imports of brandy from the EU, including on French brands including Hennessy and Remy Martin, after the European Union 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,” said a senior French industry source with knowledge of the China negotiations, who declined to be named because they were not authorised 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 will be “less unfavourable” 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 the 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 per cent due to the trade dispute, according to BNIC data.
Last week, Reuters reported that French cognac makers had reached a tentative deal on minimum import prices for the Chinese market, but that China would only finalise the deal if progress was made regarding EU tariffs on Chinese-made EVs.
Pernod Ricard, LVMH and Campari did not immediately respond to requests for comment on July 4.
The news will likely be welcomed by brandy distillers that have also seen sales slow in the United States, the world’s biggest cognac market by volume, as a result of inflation and economic uncertainty. REUTERS
