(Source: Cover News, 2024-10-10)
On October 8, China decided to implement temporary anti-dumping measures on imported brandy originating in the EU, and the EU said it would file a "strong complaint" with the WTO (World w88 Organization).
As for why tariffs were not directly imposed? Some experts pointed out that China's use of deposits to implement temporary anti-dumping measures reflects its consideration of doing its best to resolve w88 differences between the two sides through dialogue and consultation and maintain normal w88 between China and the EU.
Data shows that the EU is the world's largest brandy-producing region, and 99.8% of the brandy products exported to China are produced in France. China is the second largest market for French brandy, accounting for more than one-third of its exports.
Screenshot of the Ministry of Commerce website
Yao Ling
Director, European Institute, Institute of International w88 and Economic Cooperation, Ministry of Commerce
Li Siqi
Associate Professor, China WTO Research Institute, w88 casino
Yang Zhengjian
Dean of WBO Wine Business w88 casino
Question 1:
Why initiate an anti-dumping investigation?
On October 9, the spokesperson of the Ministry of Commerce stated that China’s anti-dumping measures against imported brandy originating from the EU are legitimate w88 remedy measures initiated and implemented in response to the application of domestic industries in accordance with the law, and are fully in compliance with WTO rules.
The Ministry of Commerce’s announcement shows that in response to the application of the relevant domestic brandy industry, it has decided to launch an anti-dumping investigation into imported relevant brandy originating in the EU.
The announcement stated that after the case was filed, the Ministry of Commerce conducted an investigation in strict accordance with Chinese laws and regulations and WTO rules, and ruled that there was dumping of imported brandy originating in the EU, the related domestic brandy industry was threatened by substantial damage, and there was a causal relationship between dumping and the threat of substantial damage.
Question 2:
Why not directly impose tariffs?
The Ministry of Commerce announced that it will implement temporary anti-dumping measures on imported brandy originating in the EU in the form of a deposit from October 11. The deposit ratio of each company is 30.6%-39.0%. Among them, the margin ratios of Martell Co., Ltd., French Hennessy Company and E. Rémy Martin Company are 30.6%, 39.0% and 38.1% respectively. The ratios of other companies that cooperated with the investigation are all 34.8%.
List of brandy producers' margin ratios. Data chart
Why adopt the form of deposit instead of imposing tariffs?
Yao Ling, director of the European Institute of the Institute of International w88 and Economic Cooperation of the Ministry of Commerce, said in an exclusive interview with Cover News that this measure is a decision made by the investigation agency after an investigation in accordance with relevant Chinese laws and regulations and WTO rules. It is completely based on facts and is understandable. "According to Chinese laws, regulations and WTO rules, temporary anti-dumping measures can take the form of deposits, temporary anti-dumping duties, etc. The method used will be decided by the investigation agency in accordance with the law."
Yao Ling analyzed that the margin ratio of each company in this preliminary ruling is 30.6%-39.0%. According to legal provisions, the investigation agency should issue final anti-dumping measures before January 5 next year. In other words, from October 11 this year to January 5 next year, the European side's export of the above-mentioned products to China will need to pay a deposit to China according to the relevant deposit ratio. This may increase the pressure on exporters' capital turnover, but the import tariffs on the products will not be increased for the time being.
"The Ministry of Commerce's implementation of temporary anti-dumping measures in the form of deposits is fully in line with WTO rules. Temporary anti-dumping measures usually do not exceed 4 months and the longest is no more than 9 months." Li Siqi, associate professor at the China WTO Research Institute at the w88 casino, told the cover news that according to Article 7 of the WTO's Anti-dumping Agreement, temporary anti-dumping measures can take the form of temporary taxes, or more preferably, in the form of cash deposits or letters of guarantee.
Question 3:
What is the impact of French wine companies?
After the news of temporary anti-dumping measures came out, the share prices of French spirits manufacturers "falled" after the opening. The share price of LVMH, the luxury goods group that produces Hennessy, fell by more than 3%, and Rémy Cointreau fell by more than 8%.
Data shows that China is the second largest market for French brandy, accounting for more than one-third of exports. Raphael Delpec, head of the French Cognac Industry Association, said the announcement sent a "further signal" that China might impose tariffs. Delpec said that major companies exporting cognac to China usually have import subsidiaries in China, and "we will have to raise funds for the deposit."
“The implementation of temporary anti-dumping measures in the form of a deposit reflects China’s efforts to resolve w88 differences between the two sides through dialogue and consultation and maintain normal w88 between China and Europe.” Yao Ling believes that if China introduces final anti-dumping measures, the competitiveness of European exports to China, especially French brandy, will be greatly reduced, and the affected ones will definitely be French brandy producers.
According to French media analysis, if China officially decides to impose additional tariffs, this deposit will be deducted retroactively. In this regard, Li Siqi said that it depends on whether the anti-dumping final decision imposes retroactive taxation. If not, the deposit should be refunded. If the tax is retroactively imposed, the principle of refunding more and not making up for the less will be followed. "If the range of the temporary anti-dumping measures is higher than the range of the final anti-dumping measures, the higher part should be refunded. If the range of the temporary anti-dumping measures is lower than the range of the final anti-dumping measures, there is no need to make up for it."
Question 4:
“Retaliatory measures” to increase taxes on electric vehicles?
Public information shows that the EU is the largest brandy producing region in the world, and 99.8% of the brandy products exported to China are produced in France.
It is worth noting that the French government has always supported the EU in imposing tariffs on Chinese electric vehicles. Some EU media have speculated that China’s measures are retaliatory measures against the EU’s insistence on increasing taxes on Chinese electric vehicles.
“China’s temporary anti-dumping measures against imported brandy from the EU are legal relief measures to prevent continued damage to domestic industries caused by brandy imported from the EU during the anti-dumping investigation period. It is not a response to the China-EU anti-subsidy dispute on electric vehicles.” Li Siqi pointed out that in fact, in the absence of a serious lack of factual and legal basis, the EU’s act of imposing countervailing duties on Chinese electric vehicles is a clear violation of WTO rules.
The spokesperson of the Ministry of Commerce said that the EU’s previous anti-subsidy investigation into China’s electric vehicles was not based on industry applications. In fact, relevant EU member states and their industries also had major objections to this. The EU's relevant measures seriously lack factual and legal basis, clearly violate WTO rules, and are actually w88 protectionism in the name of w88 remedies. In order to resolutely defend the legitimate development rights and interests of China's electric vehicle industry, China has made strong representations at the WTO and referred relevant countervailing measures to the WTO dispute settlement mechanism.
Question 5:
Will the price of brandy increase in the domestic market?
What impact will the implementation of this temporary anti-dumping measure have on the imported brandy and cognac industry chain?
The "China Brandy Market Competition Landscape and Investment Risk Forecast Report 2024-2030" released by Zhiyan Consulting shows that the domestic brandy industry has grown rapidly in recent years, and imported brandies have flooded into the market, further dividing the market and making market competition more intense. At present, China's mid-to-high-end brandy market is occupied by well-known foreign brands, with a market share of over 70%, while local companies have a lower market share.
“In the short term, the temporary anti-dumping measures will not have much impact on the domestic brandy market.” Yang Zhengjian, dean of the WBO Wine Business w88 casino, said in an interview with a cover news reporter that from November last year to April this year, brandy import data grew rapidly, indicating that relevant French wine companies have prepared goods. At present, the market inventory is relatively large. If the relevant anti-dumping measures continue for a longer period, the impact on the market will gradually appear.
Remy Martin, Hennessy and Martell are the three major brands of imported brandy and cognac, commonly known as the "Three Oceans" in the industry. Xue Dezhi, executive director of Hill & Knowlton's luxury wines, revealed, "The three major foreign wine brands have been operating in China for many years and have established complete inventory and warehousing systems. The dealer channel inventory can be sold for 1-2 years. It is difficult for the market to increase prices in the short term. The follow-up depends on the manufacturer's policies."
If temporary anti-dumping measures are taken against imported brandy from the EU, who will pay the deposit? Yang Zhengjian said that "Three Oceans" has its own company in China. They first ship goods to China and then sell them to dealers. This deposit may need to be paid in advance. "When the inventory is sold out in about a year and a half, the cost of sales will increase, and the long-term trend of Chinese consumers buying French brandy may slowly decline."
Yang Zhengjian also predicted that this measure may change the domestic spirits market structure and accelerate the substitution of whiskey category for brandy category, because foreign liquor giants themselves also produce whiskey. In addition, domestic brandy manufacturers such as Changyu can fill some shares in the high-end market.
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