France and China are making progress toward resolving a trade dispute over cognac imports, with a final decision on potential tariffs now delayed until June, French Foreign Minister Jean-Noël Barrot said.
The dispute began last year when China imposed provisional tariffs ranging from 30.6% to 39% on European brandies, including France’s Rémy Martin. The move came in response to the European Union’s decision to impose duties on Chinese electric vehicles, escalating tensions between Beijing and Brussels.
China’s Commerce Ministry initially ruled that European brandy imports were being dumped on the Chinese market, causing “substantial damage” to domestic producers. As a result, importers were required to deposit an amount equivalent to the tariff with Chinese customs while awaiting a final decision.
Delayed Decision Offers Hope for Resolution
Barrot confirmed that China’s investigation into the issue has been extended by three months, pushing the deadline to June. This postponement has eased immediate concerns that the provisional tariffs could be made permanent.
“The risk faced by the industry until yesterday was that definitive application would be made at the end of the investigation period,” Barrot said. “Following this visit, I received confirmation that the investigation has been postponed by three months, which rules out the scenario of a sudden application of definitive duties on this sector.”
Barrot emphasized that the French government is committed to working with China to resolve the dispute and prevent long-term trade restrictions. “Step by step, we’re moving towards a resolution,” he added.
Economic Impact of Cognac Tariffs
China represents the largest market for cognac by value, making the country a crucial trading partner for French producers. Industry experts estimate that definitive tariffs could impact 70,000 direct and indirect jobs, affecting 270 cognac houses and 4,400 winegrowers in France.
The dispute is part of a broader trend of trade tensions between China and Europe. In addition to brandy, China has launched anti-dumping investigations into other European imports, including port wine and dairy products.
The brandy investigation, however, has been particularly focused on French producers, who dominate the cognac and armagnac markets. If China makes the provisional duties permanent, it could significantly disrupt France’s luxury beverage exports.
Diplomatic Efforts and Political Symbolism
French President Emmanuel Macron has made diplomatic efforts to ease tensions, even presenting Chinese President Xi Jinping with two bottles of cognac during Xi’s state visit to France last year. The gesture highlighted the importance of cognac exports to France’s economy and its trade relationship with China.
As the June deadline approaches, both sides will continue negotiations to seek a solution that avoids long-term damage to their economic ties. For now, the delay offers a temporary reprieve for French cognac producers, who remain hopeful that a resolution can be reached.
