The Japan Times - France says 'major issues' remain despite brandy price accord with China

The signs of a thaw in the row over the alcohol came as China's Foreign Minister Wang Yi met French President Emmanuel Macron and Foreign Minister Jean-Noel Barrot in Paris.

In recent months China and the European Union have butted heads over Beijing's generous subsidies for its domestic industries.

Beijing launched an investigation last year into EU brandy, months after the bloc undertook a probe into Chinese electric vehicle (EV) subsidies.

In the latest salvo, China will from Saturday require European brandy exporters to raise prices or risk anti-dumping taxes of up to 34.9 percent.

Beijing said 34 European brandy makers, including several French cognac producers, had signed an accord to avoid tariffs as long as they stick to an agreed minimum price.

France's cognac makers' association BNIC, which includes key producers Hennessy, Remy Cointreau and Martell, confirmed that some companies had agreed to price increases in China to avoid anti-dumping taxes.

- 'Positive step' -

Macron and Barrot praised China's steps to resolve the dispute but stressed they would discuss the outstanding differences with Wang.

"This is a positive step towards resolving this dispute, which was threatening our exports," Macron said on X.

"I will continue to raise these issues with the Chinese authorities this afternoon."

In a statement to AFP, Barrot said: "Several major issues remain unresolved, in particular the exclusion of certain players from the scope of the exemptions."

"We remain fully committed to reaching a definitive solution based on the conditions that existed prior to the investigation," he said.

Wang has held fraught meetings in several European countries this week.

After meeting Macron and Barrot, Wang told a press conference: "The two sides had in-depth, active and sincere exchanges on Sino-French and European relations."

No mention was made of the brandy dispute.

Almost all EU brandy is cognac produced in France, whose exports to China are worth 1.4 billion euros ($1.6 billion) per year.

French liquor giant Jas Hennessy said it would face levies of 34.9 percent if it did not stick to the deal. Remy Martin will be hit with 34.3 percent and Martell 27.7 percent.

"The decision to accept the price commitment once again demonstrates China's sincerity in resolving trade frictions through dialogue and consultation," a Chinese commerce ministry spokesperson said in a statement.

However, the European Commission kept up criticism of China's new tariffs.

"We believe that China's measures are unfair. We believe they are unjustified," said commission trade spokesman Olof Gill.

"We believe they are inconsistent with the applicable international rules and are thus unfounded."

- Upcoming summit -

China has sought to improve relations with the European Union as a counterweight to the United States.

But frictions remain, including a yawning trade deficit of $357.1 billion between China and the EU, as well as Beijing maintaining close ties with Moscow since Russia invaded Ukraine.

The trade row blew up last year when the EU moved to impose hefty tariffs on Chinese electric vehicles, arguing that Beijing's subsidies unfairly undercut European competitors.

Beijing rejected the accusation and announced what were seen as retaliatory probes into imported European pork, brandy and dairy products.

The EU imposed extra import taxes of up to 35 percent on Chinese electric vehicles in October.

Beijing lodged a complaint with the World Trade Organisation, which in April said it would set up an expert panel to investigate.

China and the EU are to hold a summit this month to mark the 50th anniversary of their diplomatic ties. But Bloomberg News reported, citing unnamed sources, that Beijing would cancel the second day of the summit, in a sign of the tensions.

K.Tanaka--JT