Trade Dispute Threatens European Wine Sales to China

25/07/2013 12:00 - 446 Views

A developing trade dispute between China and Europe over solar panels has created a tense, damaging situation for European wine producers, who are facing retaliatory tariffs on their exports to China. “This is very bad for the French, Spanish and Italians,” said Jorge Rosas, export director for Ramos Pinto in Porto, Portugal.

Many European winemakers are struggling because of weak domestic economies, and China offers a lifeline. “It’s difficult in Greece, but we’ve been building exports,” said Periklis Drakos of Greek producer Tsantali, which has 25 stores in China.

After investigating allegations that China has been “dumping” solar panels, or selling them below cost to gain market share, the EU on June 4 imposed provisional anti-dumping duties on imports of solar panels from China. During the first phase, which lasts until August 6, the duty is 11.8 percent. After that it will be 47.6 percent, which corresponds to the levels an EU investigation found was necessary to remove the harm done by dumping on the European industry.

A day after the announcement, Beijing announced it would investigate a complaint by the Chinese wine industry that Europeans have been exporting wine to China at below cost and subsidizing exports.

In France, Bernard Farges, president of the Conseil Interprofessionnel du Vin de Bordeaux (CIVB), said that the wine trade is already feeling the pain of a possible trade war. “Uncertainty is bad for business. Orders have slowed down,” he said. An EU trade official close to the negotiations told Wine Spectator that they were using every opportunity to defuse the situation. “Our office takes this very seriously.”

As part of the investigation, European wine producers had until July 20 to comply with Chinese authorities, registering and providing information about their wine production and exports. “Voluntary registration” costs approximately $6,500 per company.

The consequences of snubbing Beijing are considerable. While one prominent Port shipper likened the process to “collaborating with the Inquisition,” companies who do not register will face higher import taxes during the investigation. Registered companies will benefit from lower taxes, but run the risk of being singled out for an intensive investigation, which could prove even more costly.

Farges told Wine Spectator that investigated companies would get financial help and legal representation. “The outcome affects all of us, so they need our assistance,” said Farges.

Alain Castel, CEO of French wine firm Castel & Freres, said that he expected common sense to win out. “The Chinese want to protect their interests. That’s normal. The Europeans want to protect their interests. That’s normal. But you have to understand that the first export market for the Chinese is Europe, and the Chinese market for Europeans is very important. Obviously we need to come to an understanding.”

July 24, 2013

By Suzanne Mustacich

Source: winespectator.com