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China to Investigate European Wine in Wake of Solar Panel Tariffs

June 5, 2013 by Leave a Comment

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

Filed Under: Global Business Tagged With: , ,

China to Investigate European Wines After Solar Panel Tariffs

June 5, 2013 by Leave a Comment

HONG KONG — China’s nouveaux riches 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.

  President François Hollande of France called on Wednesday for officials from all 27 countries to meet and form a united position on trade policy toward China, while France’s trade ministry labeled the Chinese action as “reprehensible.”

Threatening to retaliate against fine wines during a trade dispute with the European Union is a 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.

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

Filed Under: Global Business Tagged With: , ,

Chinese Telecom Companies Caught in Middle of Trade Dispute

May 26, 2013 by Leave a Comment

“Actually in France, this market is quite developed and Huawei and Alcatel can coexist, just like in China,” Mr. Hu said at a hotel in the touristy Trocadéro neighborhood. “I don’t want there to be a misunderstanding. We are not here to replace Alcatel. It would be like saying Alcatel is coming to China to replace Huawei.”

A month later, on May 17, the European trade commissioner, Karel De Gucht, accused Huawei and another Chinese equipment maker, ZTE, of violating anti-dumping and subsidies laws of the European Union. Mr. De Gucht, a Belgian lawyer, called for negotiations between the Union and China to avoid an investigation that could lead to punitive customs duties.

Now the two sides appear set to meet in an attempt to work out their differences. China has asked that Mr. De Gucht hold an informal meeting with its vice commerce minister, Zhong Shan, in Brussels on Monday, China’s Ministry of Commerce and an E.U. trade spokesman confirmed on Sunday.

“It appears that the commission is using the telecom equipment situation as some kind of a stick and bargaining chip against China,” said Stuart Newman, an anti-dumping expert at the Foreign Trade Association, a Brussels group that represents European trade associations.

Mr. Newman said the Europe-China trade relationship had become more difficult over the past two years, fueled by disputes over solar panels and, now, telecom equipment.

The 27-nation Union is China’s biggest trading partner, the destination for Chinese exports worth €289.7 billion, or $377 billion, last year. Last September, Mr. De Gucht opened an anti-dumping investigation into Chinese solar panel makers after receiving a complaint from a European industry association, EU Pro Sun. That investigation is set to conclude later this year.

The stakes in the solar panel dispute dwarf those of the telecom equipment makers. Last year, Chinese exports of solar panels and components to the Union were roughly €21 billion, while shipments of telecom network gear were only about €1 billion, according to European Commission figures.

A meeting Sunday between the Chinese premier, Li Keqiang, and the German chancellor, Angela Merkel, also touched on the trade tensions. Both leaders stressed their desire to resolve the dispute over solar tariffs, which Mr. Li said China sees as being dangerous to the global economy.

“These are measures that will flood into the neighboring countries, and are not useful to anyone,” Mr. Li said.

A person close to the European negotiating team played down the Chinese push for dialogue, saying the country’s trade officials were maneuvering ahead of June 5, when Mr. De Gucht is expected to reveal the level of punitive tariffs that the European Commission intends to impose on Chinese solar panel makers. Serious negotiations with the Chinese will only commence after the commission publishes the customs duties, the person said.

An important legal difference separates the telecom equipment and solar panel cases. For the telecom sector, formal legal proceedings have not yet begun, and an agreement between governments could head them off.

On the solar panel case, anti-dumping and anti-subsidy cases are already well along, greatly limiting the statutory authority of European officials to negotiate. Once the Union announces the preliminary level of anti-dumping duties, then any deal would legally need to take the form of an offer by the Chinese industry, not the Chinese government.

Hakan Wranne, an analyst at Swedbank in Stockholm, said Mr. De Gucht’s accusations that the Chinese firms were violating anti-dumping and subsidies laws suggested that the commissioner believed he had a good case against Huawei and ZTE. “I don’t think he would be making these types of claims unless he felt he had solid evidence,” Mr. Wranne said.

But a prosecution of the Chinese telecom equipment makers could cost European rivals in terms of lost revenue in China, where the state-owned mobile operators are preparing for what may be multibillion-euro contracts to build the country’s first fourth-generation high-speed networks.

Article source: http://www.nytimes.com/2013/05/27/technology/chinese-telecom-companies-caught-in-middle-of-trade-dispute.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Off the Charts: Europe Frets Over Trade Deficits With China

May 21, 2011 by Leave a Comment

The commission said China was “significantly subsidizing its coated fine-paper industry by giving cheap loans, allocating land below market value and granting various tax incentives,” and announced duties of up to 12 percent on imports of high-quality paper used for magazines and brochures.

While the move affected only one industry, it was indicative of rising worry in Europe. “There is a general feeling that economic openness and business climate in China are not improving, so we will use all instruments at our disposal to improve the situation there,” Europe’s trade commissioner, Karel De Gucht, told a European Parliament committee last month.

Over all, the bilateral trade deficits between countries in the European Union and China have been growing since economies began to recover in 2009, but there are wide differences between countries. Trade levels had plunged during the financial crisis, and are now recovering.

Germany, by far the largest exporter in Europe, now runs a trade surplus with China, something it did not do before the financial crisis. But Italy’s terms of trade have weakened significantly.

The accompanying charts show that exports from most European countries to China are rising faster than imports from China. But if Europe is to start reducing its bilateral deficits with China, it will have to make even more adjustments. At the extreme, Greek exports are now running at well over twice their 2007 level, while Greek imports from China are declining and are only slightly ahead of the 2007 level. But because Greek exports are so small, Greece still exports only 10 cents worth of goods to China for each dollar’s worth it imports.

Bilateral trade deficits are not the full story, of course. A country can run a large deficit with one country and a similar surplus with another. But with China now by far the world’s largest exporter, a big deficit with it can be hard to overcome. Britain’s trade deficit with China was nearly 5 percent of its gross domestic product in 2010.

The charts show the four largest economies in the European Union — Germany, France, Britain and Italy — and the three that have been forced to seek bailouts — Greece, Ireland and Portugal. The final chart shows the combined trade with China of the other 20 countries in the union.

The austerity that was forced upon Ireland and Greece has stifled imports, particularly in Ireland, and something similar seems likely to happen in Portugal. But Italy, which is also deeply in debt but has a growing economy, has been able to rapidly increase its Chinese imports. As a result, its trade deficit with China has nearly doubled over the last year.

The trade figures are released by China and are in dollars, which is the currency used to denominate most international trade. China has released data through April for its major trading partners but has given figures only through February for some smaller ones.

The United States has also been vocal in worrying about its trade deficit with China, which is now larger than it was before the crisis. But while Europe has focused on specific industries, looking for subsidies and other unfair trade practices, the Americans have emphasized the need for China to allow its undervalued currency to appreciate.

Floyd Norris comments on finance and the economy on his blog at nytimes.com/norris.

Article source: http://feeds.nytimes.com/click.phdo?i=17a84ebbe611d9546cfed4a73e362677

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