Efforts to resolve the brandy trade dispute between France and China have gained momentum, with both nations engaging in renewed talks to address tariffs imposed on European imports of the spirit.
This development rekindles hopes within the Cognac and Armagnac industries, whose exports to China have been severely impacted by Beijing’s anti-dumping duties.
Context: The EU-China Trade Dispute
The current impasse stems from broader trade tensions between the European Union (EU) and China. The European Commission’s decision to impose tariffs on Chinese electric vehicles triggered a retaliatory measure from Beijing, targeting EU brandy exports. Since August 29, Chinese authorities have imposed an average tariff of 35% on Cognac and Armagnac, claiming to address alleged dumping practices by European producers.
The tariffs have added a significant burden to French exporters, requiring importers in China to pay a deposit equivalent to the tariff. This measure, in place since October 11, has disrupted cash flows and strained the financial feasibility of exports to one of the most lucrative markets for French spirits.
Political Problem, Political Solution
In response to the escalating crisis, the Bureau National Interprofessionnel du Cognac (BNIC) declared in a statement that the issue transcends legal frameworks and requires political intervention. Recognizing the potential long-term damage to the brandy sector, French lobby groups, including the Bureau National Interprofessionnel de l’Armagnac (BNIA), the Fédération des Exportateurs de Vins et Spiritueux (FEVS), and the Maison des Vins et Spiritueux (MVS), have joined forces to urge the French government to pursue diplomatic solutions.
During a recent meeting with French President Emmanuel Macron, representatives of these organizations highlighted the urgency of resolving the conflict, given the importance of China as a market for European brandy.
Progress Amid Trade Tensions
Encouraging signs emerged after high-level meetings between French and Chinese officials in Shanghai. These discussions marked a revival of dialogue, providing a platform for addressing mutual concerns. The Chinese Ministry of Commerce (MOFCOM) has announced the possibility of substituting the mandatory cash deposit with a bank guarantee. If implemented, this measure would alleviate some of the administrative and financial burdens faced by importers, signaling a step towards easing trade barriers.
Although the announcement is seen as a positive move, industry representatives remain cautious. Lobbyists describe it as an "initial positive reaction," emphasizing that much work remains to reach a definitive resolution.
A Critical Market for French Spirits
China represents a cornerstone of the French spirits export market, with Cognac and Armagnac enjoying significant popularity among Chinese consumers. In 2023, China accounted for a substantial portion of Cognac exports, with high demand for premium and luxury offerings. Prolonged tariffs risk undermining these gains, potentially pushing Chinese importers to seek alternatives.
Path Forward: The Need for Bilateral Agreement
The resolution of this dispute hinges on sustained political will and effective diplomacy. Both France and China have expressed interest in finding a mutually acceptable solution, but progress depends on bridging differences exacerbated by broader EU-China trade tensions.
For French exporters, the stakes are high. A swift resolution is essential to safeguard the sector’s reputation, protect market share, and ensure the stability of one of France’s most iconic industries.
Source: Vinetur