China will not impose provisional tariffs on European brandy makers, the government announced Thursday, even though it said it had found evidence of dumping.
Beijing launched an investigation in January into brandy imported from the European Union, months after the EU undertook an investigation into Chinese electric vehicle subsidies.
An organisation representing French Cognac producers expressed alarm over China's dumping claims, saying Cognac houses are "collateral damage in a conflict out of their control".
The Chinese Ministry of Commerce said the probe followed a complaint filed in November by China's liquor association on behalf of the domestic brandy industry.
Beijing's investigation found that imported brandy from the European Union had been dumped into China and "the domestic brandy industry was threatened with substantial damage", the Ministry of Commerce said in a statement.
But "no provisional anti-dumping measures will be adopted at this time", the statement added, not ruling out future tariffs.
Shares in French spirits makers Remy Cointreau and Pernod Ricard rallied on Thursday following the announcement.
Cognac's interprofessional bureau warned that should they be imposed, tariffs could go as high as 34.8 per cent, and that China accounts for about a quarter of Cognac exports.
"This announcement is especially incomprehensible because we fully cooperated with the Chinese authorities throughout their investigation and demonstrated the full transparency of our practices," it said in a statement provided to AFP.
The group called on the French government and the European Union to "immediately negotiate" an end to the threatened tariffs.
French drinks group Remy Cointreau said it had demonstrated "that our products and commercial practices are in conformity with Chinese and international regulations."
China imported more brandy than any other spirit in 2022, with most of it coming from France, according to a report by research group Daxue Consulting.
This month, Beijing launched a probe into EU subsidies of some dairy products imported into China, the day after the bloc said it planned to impose five-year import duties of up to 36 per cent on Chinese EVs.
The investigation, which marks the latest barb in a trade standoff between the two, will cover a range of items including fresh cheese and curd, and some milk and cream.
