Beijing duties on brandy challenged; EU-China dispute at WTO begins

Brussels – The tariff war between the EU and China comes into full swing. The European Commission has requested consultations at the World Trade Organization (WTO) over the tariffs imposed by the People’s Republic on ‘made in the EU’ brandy. It is the latest act in the escalating clash between Brussels and Beijing since the EU imposed tariffs on Chinese electric cars.

The EU is holding its ground and is determined to assert its position. China’s provisional tariffs are considered “not in line” with  WTO rules and unfounded because “China has not proven that there is any threat of injury to its brandy industry,” the EU executive said while announcing the formal request to start consultation at the World Trade Organization. 

“By requesting consultations with China over its provisional anti-dumping measures on EU brandy, the Commission is following through on its commitment to protect our industry from unfounded accusations and misuse of trade defense measures,” Trade Commissioner Valdis Dombrovskis stressed.

There is little doubt in Brussels that the People’s Republic’s decision to impose duties on European brandy is nothing more than retaliation for the EU’s decision to respond to government subsidies for battery-powered cars produced in the Asian country. The Beijing government announced provisional duties on European spirits on Oct. 8. When, on Oct. 29, the EU made final duties on Chinese eco-friendly cars, Beijing took it from there and did the rest: on Nov. 11, Chinese tariffs became definitive.

The EU’s decision to initiate consultations at the WTO is a necessary preliminary step to start dispute settlement procedures in the World Trade Organization. Now, China has 10 days to respond to the EU’s request to find a mutually convenient consultation format and date. If a satisfactory solution is not reached, the case may be referred to a WTO panel for resolution. Either way, the EU-China trade war begins.