French President Emmanuel Macron hailed the ruling as a ‘positive step’, after Beijing granted exemptions to France’s top cognac makers

China’s new anti-dumping duty targeting European brandy unexpectedly became the toast of France over the weekend, after Beijing granted exemptions to a string of French cognac makers.

The cordial reaction in Paris came as a surprise to many analysts, who had initially predicted that China’s decision to impose the tariff might further raise tensions with the European Union and sour preparations for an upcoming leaders’ summit in Beijing.

But French leaders ended up hailing the ruling as a “positive step”, after a deal was brokered that saw major producers including Hennessy, Martell and Rémy Martin sign on to a minimum export price that exempted them from the levy.

That allowed Chinese foreign minister Wang Yi to wrap up his European tour on a positive note on Sunday, with Beijing having published an official list of 34 companies exempted from the tariff and French industry insiders sharing that the move could have a huge impact.

The exemptions will cover roughly 90 per cent of French cognac exports to China in volume terms, according to France’s Union Générale des Viticulteurs pour l’AOC Cognac (UGVC), a producers’ union with 2,000 members.

French foreign minister Jean-Noël Barrot framed China’s announcement as an “agreement” reached between China and the cognac industry at a joint press conference with Wang on Friday evening, Paris time.

“The agreement announced today is an important step that allows the investigation to be closed. Regarding cognac and Armagnac, the industry is saved,” Barrot said.

He added that discussions between Paris and Beijing since the beginning of the year had created a “favourable atmosphere” for both sides to find “constructive solutions” to their disagreements.

Beijing initially launched an anti-dumping investigation into European brandy last year, shortly after the EU announced plans to impose tariffs on Chinese-made electric vehicles.

The two sides have been locked in discussions over a series of trade disputes for months, with several European leaders expected to travel to Beijing for a crunch summit in July.

Beijing said on Friday that its decision to accept price undertakings from French cognac firms showed China’s willingness to resolve disagreements through dialogue.

French President Emmanuel Macron said on Friday that the agreement would apply to most of the country’s cognac and Armagnac producers.

“This is a positive step towards resolving this dispute that was threatening our exports,” Macron said in a post on X.

Wang Yi also pointed to the brandy announcement as a positive development while meeting with Macron on Friday.

“China and the EU have resolved the brandy issue through friendly consultations. We hope that France, as a key country of the EU, will push the European side to properly handle China-EU economic and trade differences and actively respond to China’s concerns,” Wang said in the Chinese readout published on Sunday.

Macron said the EU and China should make a strategic choice to be “predictable and trustworthy friends and partners to each other”, while stressing that France welcomed more Chinese investment and sought “a more balanced economic and trade relationship”, according to the Chinese readout.

“I look forward to visiting China again at an appropriate time,” he added, per the readout.

But some problems have yet to be resolved between Beijing and Paris on the cognac front.

Not all French producers are covered by China’s tariff exemption, and Beijing still places restrictions on French cognac being sold in duty-free shops, according to foreign minister Barrot.

Wang gave Macron assurances that there would be an “appropriate solution” to this issue, Barrot said.

The Bureau National Interprofessionel de Cognac (BNIC), an industry body that represents France’s cognac producers, said that it would continue to push the French government and European Commission to reach a political agreement with China to remove the anti-dumping duty.

Source: SCMP