|Bordeaux winemakers smell trouble over China dumping investigation
Fears of an EU-China trade war mounted after Beijing launched an anti-dumping investigation into European wine imports, a move greeted with alarm in the vineyards of Bordeaux, France.
The announcement of the wine dumping inquiry came a day after the European Commission imposed anti-dumping duties on solar panels imported from China.
China is Bordeaux's biggest export market and takes one in five of the bottles produced in the area, where up to 55,000 jobs depend on the sector.
“We are taking this very seriously,'' Allan Sichel, the president of the Bordeaux wine merchants federation, told AFP. “We are not yet at the stage of retaliatory measures but that could be the outcome.’’
He said Bordeaux was the leading wine imported into China, “so it is Bordeaux that will be hit the hardest'', and that Chinese sanctions “would be catastrophic for the majority of winemakers.’’
The commission announced the immediate imposition of a tariff of 11.8 percent on China solar panels. That will rise to 47.6 percent on August 6 if there is no resolution of the dispute.
The 27-nation EU is divided over the decision to launch a dumping inquiry.
German government spokesman Steffen Seibert said Chancellor Angela Merkel agreed with China's leadership when they said they wanted a negotiated solution.
“It isn't in Europe's, Germany's or China's interests to seek a trade dispute,'' he said.
As analysts warned that a damaging trade war was now a real possibility, Chinese officials urged the EU to show “sincerity and flexibility'' in trying to resolve the issue.
China's decision to focus its retaliation on the wine sector suggests France may be paying the price for its high-profile support for the commission's action over solar panels and for a broader “rebalancing'' of trade with China. That was a campaign promise by President Francois Hollande ahead of last year's election.
According to Commission figures, China bought 763 million euros worth of wine from Europe last year, of which 546 million euros worth came from France, 89 million euros worth from Spain and 77 million euros worth from Italy.
Although the EU does not subsidize exports of wine directly, it does provide support to producers through a variety of programs which could, arguably, be viewed as having on impact on the prices they can afford to sell at.
Yao Wei, a Hong Kong-based economist with Societe Generale, said the spat over solar panels and wine was rooted in China's “huge'' overcapacity in many industries.
“In order to digest its overcapacity, China will unavoidably intensify global trade tensions,'' she predicted. ``It will certainly face more and more similar trade frictions, not just with the EU.''