China has proposed minimum prices for French cognac imports as part of resolving its trade dispute with the European Union regarding electric vehicle tariffs. The agreement must be reached by July 5 to avoid permanent high tariffs.
Key Details of the Agreement
China has proposed minimum prices for cognac ranging from 46 yuan ($6.39) per liter for VS-grade cognac to 613 yuan ($85) per liter for premium XXO. This offer is linked to an ongoing anti-dumping investigation into EU brandy and needs resolution by July 5 to prevent permanent duties of up to 39%.
Impact on Cognac Producers
Leading houses like Hennessy, Martell, and Rémy Martin expect slightly higher minimum prices compared to smaller producers. Reports indicate that temporary tariffs have already slashed cognac exports to China by 70%, negatively impacting the financial performance of firms like Pernod Ricard and Rémy Cointreau.
Trade Tensions and Future Negotiations
The trade disputes between China and the EU extend into other sectors, including an investigation into EU pork imports. The upcoming EU-China summit scheduled for July 24-25 is expected to focus on discussing both electric vehicle tariffs and cognac pricing.
The situation regarding cognac tariffs and electric vehicles remains uncertain; however, dialogue between China and the European Union continues to evolve. Results from the upcoming summit may lead to new changes in trade policies.
