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Raising the stakes in a trade dispute with the European Union, the Chinese government said on Tuesday it would impose temporary penalties on brandy from Europe and was mulling broader tariffs on European goods.
China’s Ministry of Commerce issued the brandy measures after member countries of the European Union voted last Friday to proceed with anti-subsidy tariffs on electric cars from China. The ministry said that brandy importers would temporarily be required to post deposits of up to 39 percent on the wholesale value of shipments to China.
The deposits would then be forfeited and become tariffs if China eventually makes the measures permanent. The ministry accused European brandy producers of hurting Chinese producers by dumping brandy at unfairly low prices in the Chinese market.
The action produced an immediate slump in the stocks of big European brandy makers like LVMH, the corporate parent of Moët Hennessy, whose shares fell nearly 4 percent.
The European Commission said in a statement on Tuesday that it would challenge China’s measures on imports of European brandy at the World Trade Organization, which forbids trade retaliation without obtaining the group’s permission. China’s Ministry of Commerce avoided linking its action on brandy to the European Union’s move on electric cars.
“The E.U. takes with utmost seriousness any unfair use of trade defense instruments against any sector of our economy,” the statement said. “Abuse of trade defense for inappropriate reasons is a clear breach of W.T.O. rules.” The commission also said that it would look for ways to support European producers affected by China’s penalties.
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