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China May Retaliate Against EU Wine Exports Amid Anti-Subsidy Disputes

According to a report by The Drinks Business, China may soon retaliate against European Union wine exports in response to the EU’s anti-subsidy investigations into Chinese companies.

Over the weekend, a Chinese state-affiliated social media account, Yuyuan Tantian (玉渊谭天), cited “informed sources” and warned that "China has ample countermeasures ready and will likely retaliate if the EU persists with its actions."

Potential Impacts on the Wine Trade

If China follows through on this threat, it could severely impact the substantial USD 800 million wine trade between the EU and China. This trade volume represents nearly 70% of China’s total wine imports last year, highlighting the significant economic relationship between the two regions in the wine sector.

Key Exporters at Risk

Several key EU wine exporters are poised to be affected by potential Chinese retaliatory measures. France, Italy, Spain, Germany, and Portugal are among the primary exporters, with France alone accounting for almost half of the EU's wine exports to China. The repercussions could be particularly severe for French wine producers.

EU’s Dependence on the Chinese Market

The EU wine sector’s reliance on the Chinese market was underscored in a statement reported by Bloomberg, where a Chinese lawyer noted the substantial dependence on Chinese demand. The European Chamber of Commerce in China echoed this concern, emphasizing the potential severity of the threat and hinting that European wine and dairy products might be caught in the crossfire if tensions escalate.

Historical Context and Recent Developments

This potential move by China follows its anti-subsidy investigation into EU brandy initiated in January, which threatens a USD 1.56 billion spirits trade. This situation mirrors past trade tensions; in 2014, China threatened to investigate EU wines amid a dispute over solar panels.

The current scenario is reminiscent of China's 2021 imposition of significant tariffs on Australian wines, which disrupted the industry with tariffs reaching up to 218%. These tariffs were lifted by the end of March 2024, but the episode serves as a precedent for the potential impact on EU wines.

Strategic Considerations

China's possible targeting of EU wine exports can be seen as part of a broader strategy to leverage economic measures in response to international trade disputes. By potentially disrupting the EU's access to the lucrative Chinese wine market, China aims to pressure the EU into reconsidering its anti-subsidy actions against Chinese companies.

Conclusion

The looming threat of Chinese countermeasures against EU wine exports underscores the fragile nature of international trade relationships, particularly in the context of ongoing disputes. As the situation develops, the wine industry on both sides will be closely monitoring the outcomes, hoping that diplomatic resolutions can prevent economic fallout.

Source: The Drinks Business

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