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BRUSSELS — French cognac makers warned Thursday that they could be just days away from becoming the innocent victims of an escalating trade conflict between the European Union and China.
“We feel like we are being held hostage to things that have absolutely nothing to do with us and that we can be eliminated from the landscape with a stroke of the pen,” said Raphaël Delpech, director general of France’s cognac governing body, BNIC.
“It would be an absolute failure of trade policy, both for France and for Europe,” Delpech told POLITICO in an interview.
With the European Commission poised to slap tariffs on imports of Chinese electric vehicles, the BNIC — whose members employ 70,000 people and account for nearly €4 billion in export sales — fears that this move will escalate simmering trade tensions with Beijing.
In response to the investigation into state subsidies for Chinese EVs, which Paris supported, Beijing hit back in January with its own probe into European wine-based liquors. The move clearly targeted the French luxury cognac brands that make up 99 percent of China’s imports of those liquors.
During a visit to France earlier this month, Chinese President Xi Jinping committed not to impose duties — at least not until the probe launched by Beijing is finally concluded. Claiming a win, his host President Emmanuel Macron gifted Xi several bottles of France’s finest cognacs as a peace offering.
“Unfortunately, we aren’t at all reassured by the statements made after the meeting between the two presidents. Not at all,” Delpech added.
“Our fear is that the investigation will now be closed for political reasons, without our demonstration having been completed, and that definitive duties will be applied to us.”
China is the second biggest export market for the French cognac sector, after the United States, with 61.5 million bottles sold there in 2023, according to figures provided by the BNIC.
The industry also lamented it was not heard soon enough by the French authorities when it warned of the risk Beijing could go after the cognac sector as soon as last September — the month European Commission President Ursula von der Leyen announced an investigation into whether state subsidies to Chinese electric vehicle makers were unfair.
“What we really regret is that, when the risk was proven, the necessary steps were not taken to protect us from it,” Delpech said. “We, the cognac sector, were perceived as an adjustment variable, as acceptable collateral damage.”
The European Commission’s trade department is expected to notify auto makers and importers of its decision to impose provisional tariffs on Chinese EVs by early June — days before elections to the European Parliament. Von der Leyen has said on the campaign trail that Brussels would impose “targeted” duties on Chinese EVs.
