Frustrated cognac producers in southwestern France are growing increasingly worried about the looming threat of Chinese tariffs on European brandy, a move industry officials worry could force the French spirit off the Chinese market.
About 800 protesters riding tractors and carrying signs rallied in the southwestern French city of Cognac this week calling for a delay in an upcoming European Union vote on tariffs on Chinese electric vehicles.
That protest — the first since 1998 — comes after Beijing refused to rule out future tariffs following an anti-dumping investigation into brandy imported from the European Union.
The investigation was launched months after the EU launched an investigation into Chinese electric vehicle (EV) subsidies.
And with the EU voting next week to impose tariffs on Chinese electric vehicles, French brandy makers are worried about the impact the vote could have on their livelihoods.
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“The situation is urgent,” said Anthony Brun, the head of the Cognac brandy makers’ union, adding that a decision to impose tariffs on Chinese electric vehicles “would put the whole industry at risk.”
“Catholic Coil”
Cognac trade union BNIC said it was recently informed that China plans to impose tariffs of around 35 percent on European brandy, a move believed to target France.
This comes despite repeated assurances from Beijing that it would not impose provisional duties after it found that European brandy had been dumped in China, threatening the country’s domestic industry with “significant damage”.
“For a year now, we have been warning the French and European authorities of this danger and the need to stop this downward spiral,” Brun wrote in a letter to new French Prime Minister Michel Barnier about the threat of tariffs.
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“We are the victims without being in any way responsible… We were not listened to,” Brun said, writing on behalf of the cognac union.
In May, French President Emmanuel Macron thanked his Chinese counterpart for not imposing tariffs on French cognac amid the investigation, presenting Xi Jinping with bottles of the expensive liquor.
However, cooperation with Chinese authorities has produced “no results” and has cost millions, said Florent Morillon, head of BNIC.
Tariffs could force French brandy to “disappear from the Chinese market”, which accounts for a quarter of exports, Morillon added.
“no way out”
The threat of losing the Chinese market could be existential for some brandy makers, who rely on foreign consumers for up to 60 percent of their profits.
China imported more cognac than any other alcohol in 2022, with most of it coming from France, according to a report by research group Daxue Consulting.
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Cognac producers are calling on the EU to postpone a September 25 vote on imposing tariffs on electric vehicles imported from China, fearing China will retaliate with tariffs on European brandy.
“We have no way out,” said Rodolphe Texier, a member of a farmers’ union in France’s western Charente region.
“If Europe doesn’t follow us, we’re dead,” Texier said, adding that he worries about widespread industry-wide effects that could affect everyone from distillers to barrel makers to truck drivers.
With more than 4,400 farms and around 85,000 jobs, France’s cognac industry is already struggling after seeing a 22% drop in sales in 2023 and dramatically reducing new vine planting areas.
French brandy makers are not the only ones under pressure, as Beijing launched an investigation into EU subsidiaries over some dairy products in August.
Although a meeting has been set “in principle” between the BNIC and the prime minister’s office, Florent Morillon told AFP he felt he had been “held hostage” by Paris and Brussels.
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“The French and European authorities have decided to sacrifice us,” wrote union leader Anthony Brun.
“Never mind our jobs, our weight in the local economy, our contribution to trade and the image of France,” he added.
Source: AFP