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Cognac producers see red over China tariffs
Armagnac and Cognac producers are retaliating against the looming threat of Chinese tariffs by calling on the French government to rally.
The tug of war going on between the European Union and China has entered a “critical phase”, according to the Bureau National Interprofessionnel du Cognac (BNIC).
European Union officials are on the brink of imposing additional taxes on electric vehicles coming out of China, with a decision likely reached in the coming days. China is predicted to respond by imposing import tariffs on Armagnac and Cognac. The impact, the BNIC has said, will result in producers losing “an essential and irreplaceable market in the short to medium term”.
The Chinese Ministry of Commerce (MOFCOM) released a statement last month declaring that its investigation confirmed suspicions of EU brandy producers dumping their products in the country. No duties were applied with immediate effect, leaving brandy producers in a state of limbo as they await the final verdict.
If applied, the duties on EU wine-based and marc-based spirits at the end of the procedure would average 34.8%.
BNIC has warned that the impact would be “immediate and devastating” for the sector, which has already been struggling in recent years with falling sales and oversupply.
In a statement shared with the drinks business in August, Florent Morillon, president of the BNIC, said the proposed duties would “severely affect Cognac’s exports to China, a market which alone accounts for 25% of our exports”.
Taking to the streets
Hundreds of tractors descended on the streets of Cognac last week (17 September) as farmers aired their frustration. Protestors called upon EU officials to postpone the vote imposing tariffs on Chinese electric vehicle imports.
During several meetings at Matignon and the Élysée, two demands were made by the representatives of the sectors:
- France must request the postponement of the European vote on Chinese vehicles, in order to allow time for negotiations.
- A negotiated solution that avoids the application of any tariffs on our products in China must be actively pursued by the European Commission, which must make proposals to this effect.
These requests were communicated to French Prime Minister Michel Barnier, the BNIC has said.
Barnier is rumoured to be visiting the region to discuss the short-term action plan that should follow.
The BNIC said in a statement released yesterday (25 September): “Despite the ongoing harvest, our sectors remain fully mobilised on an issue in which they are being held hostage and upon which their future depends. They expect concrete and very swift responses.”
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