June 6, 2013
One day after the European Commission levied heavy tariffs, reaching 48pc in August, on subsidised solar panels made in China, the Far Eastern country announced it is considering a tit-for-tat move to levy a similar “anti-dumping” duty on wines made in EU.
Francois Hollande, the French President, has expressed alarm at a development that threatens exports worth €546m (£464m) for France and called for a special Brussels summit to discuss the escalating trade war between the EU and China.
“The President of the Republic expressed his desire that the European Commission take steps to organise a meeting to establish a united position of the 27 based on solidarity,” said Mr Hollande’s spokesman on Wednesday.
Echoing the language used by the EU before the commission hit Chinese solar panels with import tariffs, the Chinese trade ministry announced it had begun an anti-dumping investigation into EU wines at the request of Chinese wineries.
“The ministry has already received an application from the domestic wine industry, which accuses wines imported from Europe of entering China’s market by use of unfair trade tactics such as dumping and subsidies,” said a ministry statement.
“We have noted the quick rise in wine imports from the EU in recent years, and we will handle the investigation in accordance with the law.”
The Chinese move targets France and other wine producers, which all happen to be countries that supported the commission’s tariffs on Chinese solar panels despite opposition from Germany, Britain and 16 other exporting or free-trade supporting countries.
French wine exports account for 71pc of the European wines imported by the Chinese, a fast-growing market among China’s burgeoning middle classes for France, a country that is currently struggling to export goods.
In an added twist, Karel de Gucht, the EU trade commissioner who took the decision to hit China with the solar panel levies, is himself a wine producer with a €1m stake in a Tuscan vineyard that produces Chianti.
Mr De Gucht’s “La Macinaia” has benefited from a €1,500 EU farm subsidy “for the services of a consultant on biodynamic winery” but in 2011 still incurred a loss of more than €145,000 despite selling its bottles of wine for €22.49 to Belgian retailers.
“There are no exports to China,” said his spokesman.
On Tuesday, the Commission used EU trade defence powers to unilaterally impose an immediate tariff of 11.8pc, rising by another 35.8pc unless Beijing agrees to increase the prices of solar panels that Brussels believes benefit from unfair Chinese subsidies.
Italy and Spain, which both supported the solar panel tariffs along with France, will have exports worth €77m and €89m potentially covered by any Chinese retaliatory measures against European wines.
Fuelling the suspicion that France has been singled out for supporting the solar panel levies, diplomats have noted that China’s Hong Kong territory is exempt from the Chinese investigation “presumably because British companies export European wines there”, according to officials, a trade worth €213m.
The French trade ministry condemned the Chinese threat and warned of an escalating trade war if Beijing did not follow World Trade Organisation rules procedures.
“We’re taking this very seriously,” said a ministry official. “The way this was presented seems to us inappropriate and reprehensible, namely the fact that the case is not treated on its own merit but because a decision was taken in another area.”
The European Commission said that it “took note” of the Chinese investigation and would “follow it closely”. “We believe there is not dumping of European wine on the Chinese market,” said a spokesman.
Other EU officials have observed that targeting European wines with higher import duties would damage the lifestyles of China’s most rich and powerful.
“The Chinese elite will be first to suffer if fine French wines are subjected to tariffs,” said an official.
Source: The Telegraph