September 26, 2017

China to Investigate European Wine in Wake of Solar Panel Tariffs

HONG KONG — China’s nouveau riche millionaires, wealthy princelings and bribing business executives may soon find their wallets a little thinner: The price for French Champagnes and Burgundies, Italian Barolos and pinot grigios and other European wines may soon rise in mainland Chinese stores.

Less than a day after the European Union said it was imposing preliminary import tariffs on Chinese solar panels, China’s Ministry of Commerce announced Wednesday that it had begun a trade investigation of wines imported from the European Union. The investigation could lead to the imposition of steep tariffs by China.

The European Union’s trade commissioner, Karel De Gucht, announced Tuesday in Brussels that he was imposing preliminary tariffs of 11.8 percent on solar panels imported from China, saying the panels were being “dumped,” sold for less than they cost to make, in Europe.

If China was trying to send a retaliatory signal to Mr. De Gucht personally, wine might be a good target. He owns a 50 percent stake in a wine-producing estate in the Tuscany region of Italy.

The Chinese commerce ministry carefully avoided linking the solar panels to Wednesday’s announcement that it would investigate European wines for improper duties or subsidies, saying instead that it was acting in response to a complaint from Chinese wineries.

But the ministry issued a separate statement expressing “resolute opposition” to the decision on solar panels. “We hope the E.U. will further show their sincerity and show flexibility, through consultations to find mutually acceptable solutions,” the statement said.

The 27 countries of the European Union exported $980.7 million worth of wine to China last year, most of it from France, according to customs data compiled by Global Trade Information Services in Columbia, S.C. That is much smaller than Chinese exports of solar panels to Europe, which reached $27 billion in 2011 before a combination of trade frictions and cuts in European subsidies to buyers of solar panels started to discourage shipments.

Threatening to retaliate against fine wines during a trade dispute with the European Union is time-honored tactic for international trade negotiators. Wine exporters are a powerful political constituency and national figures in some European countries, particularly France. A threat to limit their overseas sales is a way to bypass European leaders and appeal to public sentiment for a reduction in trade tensions.

Mr. De Gucht was already bucking widespread opposition in Europe by taking on Beijing over solar panels, with a range of national politicians and executives from other industries eager to expand — not curtail — trade relations with China.

In November 1992, in a dispute over European farm subsidies, the United States announced that it was imposing a 200 percent tax, to take effect in 30 days, on imports of still white wines from Europe, like Chablis from France and riesling from Germany, and a few red wines. The two sides quickly reached a compromise.

Until now, China has tended to pursue retaliatory trade actions against industrial products, including imports of polycrystalline silicon, the main material for solar panels. That material is already the subject of a Chinese trade investigation after the United States imposed antidumping and antisubsidy tariffs totaling about 30 percent on Chinese solar panels.

The Chinese threat against wine imports has the potential to upset consumers in China — at least some of the most affluent ones. The move may also end up impinging on some Chinese investors because growing wine consumption in China has prompted a surge of investment in French vineyards.

In recent years, Chinese companies and business leaders have snapped up more than three dozen chateaus in Bordeaux, the wine region that has drawn the greatest interest from Chinese drinkers.

The acquisitions involved mostly lesser-known vineyards among the close to 10,000 Bordeaux estates. Many of these properties have struggled in recent years to sell their wine in the traditional markets of Europe.

James Kanter contributed reporting from Brussels, Eric Pfanner from Serraval, France, and Hilda Wang from Hong Kong.

Article source: http://www.nytimes.com/2013/06/06/business/global/china-to-investigate-eu-wine-after-subsidy-and-dumping-complaints.html?partner=rss&emc=rss

Speak Your Mind