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China Collaborates with France on Trade Issues, No Progress on Cognac Deal

Introduction

China and France are engaged in discussions to address their trade disputes, particularly concerning tariffs on European imports, with recent talks indicating progress toward a resolution.

Context

The dispute over French cognac has intensified as China's Commerce Minister, Wang Wentao, met with his French counterpart in Paris during an OECD conference. These meetings are part of ongoing technical discussions held in Beijing. Relations between Beijing and Paris have been strained due to Chinese anti-dumping measures of up to 39% imposed on European brandy, specifically targeting French cognac.

Developments

The imposition of brandy duties came shortly after the European Union initiated actions against Chinese electric vehicle imports, which French President Emmanuel Macron described as "pure retaliation." These duties have significantly impacted sales for major brands like LVMH's Hennessy, Pernod Ricard's Martell, and Remy Cointreau.

Despite an initial deadline for a final decision on the duties set for January, it has since been extended to April and then again to July 5. China aims to strengthen its trade relationship with the European Union amid deteriorating ties with the United States in the ongoing trade war.

During a call between the foreign ministers of both nations, the Chinese foreign ministry indicated that the two sides had come to a consensus on resolving trade issues through dialogue and consultation. French Trade Minister Laurent Saint-Martin emphasized that France will not compromise on protecting its industries, including cognac.

Chinese officials have signaled a willingness to settle the dispute during three rounds of talks held in Beijing, although some sticking points remain. With annual imports valued at approximately $1.7 billion last year, China is the most significant market for the French brandy industry by value and the second largest by volume, following the United States.

Conclusion

Ongoing discussions between China and France bring hope for resolving the trade disputes significantly affecting the cognac industry. Continued negotiations and dialogues may pave the way for a mutually beneficial settlement as both nations navigate their complex economic relationship.