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| China to Investigate E.U. Wine After Trade Action | China to Investigate E.U. Wine After Trade Action |
| (35 minutes later) | |
| HONG KONG — China’s nouveau riche millionaires, wealthy princelings and bribegiving business executives may soon find their wallets a little thinner: The price tag for French Champagnes and Burgundies, Italian Barolos and Pinot Grigios and other European wines may soon rise in mainland Chinese stores. | |
| Acting less than a day after the European Union said it was imposing preliminary import tariffs on Chinese solar panels, China’s Ministry of Commerce announced Wednesday that it had begun an anti-dumping and anti-subsidy investigation of wines imported from the European Union. The investigation could lead to the imposition of steep tariffs by China on these wines. | |
| The European Union’s trade commissioner, Karel De Gucht, had announced Tuesday in Brussels that he was imposing preliminary anti-dumping tariffs of 11.8 percent on solar panels imported from China. But the Chinese commerce ministry carefully avoided linking the solar panels to the wine dispute in its announcement, saying instead that it was acting in response to a complaint from Chinese wineries. | The European Union’s trade commissioner, Karel De Gucht, had announced Tuesday in Brussels that he was imposing preliminary anti-dumping tariffs of 11.8 percent on solar panels imported from China. But the Chinese commerce ministry carefully avoided linking the solar panels to the wine dispute in its announcement, saying instead that it was acting in response to a complaint from Chinese wineries. |
| The ministry issued a separate statement to express its “resolute opposition” to the solar panel decision. “We hope the E.U. will further show their sincerity and show flexibility, through consultations to find mutually acceptable solutions,” the statement said. | The ministry issued a separate statement to express its “resolute opposition” to the solar panel decision. “We hope the E.U. will further show their sincerity and show flexibility, through consultations to find mutually acceptable solutions,” the statement said. |
| The ministry did not indicate the possible level of import duties on European wines. | The ministry did not indicate the possible level of import duties on European wines. |
| The solar panel tariffs are about one-quarter of the 47.6 percent tariffs that Mr. De Gucht had planned to impose until the Chinese prime minister, Li Keqiang, began lobbying Germany and the European Commission heavily in the past week. Mr. De Gucht imposed the lower tariffs as a compromise but warned that they would rise to the originally planned level in two months if no deal could be negotiated before then to offset the effect of alleged Chinese dumping and subsidies. | |
| World Trade Organization rules allow countries to impose tariffs so as to offset the effects of government subsidies or of dumping, which is the sale of goods in foreign markets for less than the cost of making them. W.T.O. rules ban the capricious use of anti-dumping and anti-subsidy cases and do not allow them to be imposed simply as retaliation for other countries’ trade actions; W.T.O. member states with such grievances are supposed to appeal to dispute resolution panels at the W.T.O. headquarters in Geneva instead of engaging in tit-for-tat escalation. | |
| Threatening to retaliate against fine wines during a trade dispute with the European Union is one of the oldest tricks in the book for international trade negotiators. Wine exporters are a powerful political constituency and national icons in some European countries, particularly France. A threat to limit their overseas sales is a way to bypass European leaders and appeal to public sentiment in bars and cafes for a reduction in trade tensions. | |
| In November 1992, the United States announced that it was imposing a 200 percent tax, to take effect in 30 days, on imports of still white wines from Europe, like Chablis from France and riesling from Germany, and a few red wines in a dispute over European farm subsidies. The two sides quickly reached a compromise. | |
| Until now, China has tended to pursue retaliatory trade actions against industrial products, including imports of polycrystalline silicon, the main material for solar panels, which is already the subject of a Chinese trade investigation after the United States imposed anti-dumping and anti-subsidy tariffs totaling about 30 percent on Chinese solar panels. | |
| The Chinese threat against wine imports has the potential to upset consumers in China — at least some of the most affluent consumers. | |
| Growing wine consumption in China has prompted a surge of investment in French vineyards. Chinese companies and business leaders have snapped up more than three dozen chateaus in Bordeaux, the wine region that has drawn the greatest interest from Chinese drinkers. | |
| The acquisitions mostly involve lesser-known vineyards among the close to 10,000 Bordeaux estates. Many of these properties have struggled in recent years to sell their wine in the traditional markets of Europe. | The acquisitions mostly involve lesser-known vineyards among the close to 10,000 Bordeaux estates. Many of these properties have struggled in recent years to sell their wine in the traditional markets of Europe. |
| In some cases, under the new Chinese owners, production is exported entirely to China. Because the wine is marked up substantially in China — low-end Bordeaux can sell for less than 5 euros, or $6.50, in France but 5 or 10 times as much in China — it is not clear how much effect the tariffs would have on Chinese-owned vineyards. | |
| The new investments from China have also given rise to some protectionist sentiments in the French wine industry, which is closely associated with the country’s cultural heritage. | The new investments from China have also given rise to some protectionist sentiments in the French wine industry, which is closely associated with the country’s cultural heritage. |
| While Bordeaux has a long tradition of foreign ownership, local sensitivities were raised in another region, Burgundy, after Château de Gevrey-Chambertin was acquired last year by a Macau-based Chinese business executive. The far-right National Front called on the French government to block the transition, though without success. | |
| But imposing tariffs on imported wine could also be consistent with President Xi Jinping’s broader populist effort to combat corruption in China, address the country’s huge disparities in income and wealth, and present himself as a man of the people. | But imposing tariffs on imported wine could also be consistent with President Xi Jinping’s broader populist effort to combat corruption in China, address the country’s huge disparities in income and wealth, and present himself as a man of the people. |
| While the Chinese trade case was immediate news in Europe, it drew less attention in China, possibly because the Ministry of Commerce did not release a timetable for its investigation. Western governments have long complained that Chinese anti-dumping and anti-subsidy investigations are capricious exercises that seem to follow few of the complex but fairly transparent legal procedures used in the West. | While the Chinese trade case was immediate news in Europe, it drew less attention in China, possibly because the Ministry of Commerce did not release a timetable for its investigation. Western governments have long complained that Chinese anti-dumping and anti-subsidy investigations are capricious exercises that seem to follow few of the complex but fairly transparent legal procedures used in the West. |
| Sales representatives at six wine shops in Beijing and Shanghai all said in telephone interviews Wednesday that they had not noticed any sudden increase in customer interest or purchases as a result of the government announcement. “Maybe the news of the pending wine tariff has not traveled fast enough,” said Jui Qin, a saleswoman at Vinolia Wine Shop in Beijing. “There has been no change in our business today so far compared to other days.” | |
| Some in China may be able to avoid the higher price tags for wine if they are imposed. Hong Kong eliminated taxes on wine several years ago in a fairly successful bid to become a wine trading hub, and the nearly autonomous territory has become a popular place for many mainlanders to drink and bring a bottle or two home. | Some in China may be able to avoid the higher price tags for wine if they are imposed. Hong Kong eliminated taxes on wine several years ago in a fairly successful bid to become a wine trading hub, and the nearly autonomous territory has become a popular place for many mainlanders to drink and bring a bottle or two home. |
| Extra taxes could also help another, more dubious Chinese industry: the entrepreneurs who print fake French labels and slap them on bottles of local plonk, some of it almost undrinkable. | Extra taxes could also help another, more dubious Chinese industry: the entrepreneurs who print fake French labels and slap them on bottles of local plonk, some of it almost undrinkable. |
Eric Pfanner contributed reporting from Serraval, France, and Hilda Wang from Hong Kong. | Eric Pfanner contributed reporting from Serraval, France, and Hilda Wang from Hong Kong. |