Beijing Links Cognac Imports to EV Tariff Talks with EU

 Beijing Links Cognac Imports to EV Tariff Talks with EU

China is tying a potential deal on French cognac imports to progress in its ongoing dispute with the European Union over tariffs on Chinese-made electric vehicles. Beijing’s move comes as a key deadline nears: its anti-dumping probe into EU brandy, mainly French cognac, must conclude by July 5. If unresolved, current temporary tariffs as high as 39 percent could become permanent.

China has proposed a minimum pricing agreement, setting floors from 46 yuan (about 6.39 dollars) per liter for standard VS-grade cognac to 613 yuan (85 dollars) per liter for premium XXO. This is a more favorable alternative to the steep duties in place. Major producers like Hennessy, Martell, and Rémy Martin are expected to face slightly higher price thresholds than smaller competitors.

The agreement, detailed in documents prepared by lawyers for the French cognac association BNIC, is contingent on progress in EU China negotiations over EV tariffs. A French government source confirmed the linkage, though officials in Paris deny any direct connection.

The European Commission has imposed tariffs of up to 45.3 percent on Chinese EV makers such as BYD, Geely, and SAIC, citing unfair state subsidies. Discussions are ongoing to potentially replace these tariffs with minimum import-price commitments. German carmakers and leaders like Mercedes-Benz CEO Ola Källenius are calling for negotiated solutions rather than sweeping tariffs.

The EU and China are also in talks on similar arrangements in other sectors. China has extended an EU pork investigation, reflecting broader trade tensions. A high-stakes EU China summit is scheduled for July 24 to 25 and will likely focus on these trade disputes.

Cognac exports to China have fallen by up to 70 percent, and stock prices for major producers have dropped sharply. Both industries now await the outcome of delicate trade talks.

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