Wine: China Hitting the Bottle!

Looks like France is waking up with a hangover this morning and will be in need of some hair of the dog to get through China’s statement today that there will be an anti-dumping probe carried out by the latter on wine exports from the EU. France’s Trade Ministry is worried and has made a public call on the rest of the EU27 to take a collective decision.

In what looks like a tit-for-tat reaction, China has hit back on the EU after there was a decision to levy import duties on Chinese solar panels. The sun doesn’t look like it’s going to be shining in France or in other wine-producer countries in the EU.  The Two events are too close to be isolated, it seems.

The series of events started on Tuesday when the EU took the decision to impose anti-dumping levies on China for their solar panels. That tariff will amount to applying an 11.8%-tax on Chinese produced solar panels being imported into the EU. It was further stated that that tax will increase to 47.6% by August-time, unless the Sino-European meetings end in a positive result for the EU. The EU has said that China is not complying with international trade relations and has been selling those panels at levels below cost to gain a hold on the market. China already produces more panels than any other country in the world. In 2011 that meant a total of 21 billion euros. Not to be sniffed at!

There are currently 20, 000 people employed in the EU in this sector and experts have totted up that there should be an increase in Chinese prices to come in line with the EU to the tune of 88%. China has denied all dumping accusations. Once again, the question of fake figures is rearing its ugly head. The USA has already done the same after it was brought to light that the Chinese government was in fact carrying out subsidization of solar-panel manufacturers (against World-Trade Organization regulations).

Today, China has announced that they are going to have to do the same to the EU with regard to its wine exports. It may have been the lesser of two evils in that imposing taxes on other sectors might have proved more problematic. Had China decided to whack the levy on the aeronautics industry, they would have suffered more perhaps.

France exports to a value of 1 billion euros in wine to China at the present time and the Chinese market is 9% of their wine market.

The announcement by China has had wine producers in France and elsewhere literally getting the shakes. China has branded the anti-dumping tax as a punitive measure by Brussels. French President François Hollande has called for an emergency meeting to tackle the problem, denying that any subsidies are allocated on exports from the EU on wines.

Looks like China has the EU exactly where they want them. Doesn’t seem like they will be buying a round after work today, at least. China has been hitting the bottle but what will the outcome be over the next few days?

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