China decided today to go ahead with imposing tariffs on European brandy as part of the anti-dumping investigation launched by Beijing in January, but exempting major cognac producers such as Pernod Ricard, LVMH, and Remy Cointreau from the high tariffs, a rare bright spot in a period of trade tensions between Brussels and Beijing.

China will impose tariffs of up to 34.9% for five years from tomorrow, Saturday, on brandy originating European Union, most of which will be cognac from France, the Chinese Ministry of Commerce announced in a final decision.

However, most of the French cognac industry, including major brands Hennessy and Remy Martin, owned by LVMH, will be exempt from the tariffs, provided they sell at a minimum price, the ministry said in a statement. It did not disclose the minimum prices.

Beijing launched an anti-dumping investigation last year into imports of European spirits, mainly cognac, in response to the European Union’s ongoing investigation into Chinese state subsidies for Chinese-made electric vehicles. French cognac producers generate global exports of $3 billion a year.

Brussels reacted to the announcement of the tariffs. “We regret China’s decision to impose tariffs on EU brandy. The decision was communicated to us today. The Commission has followed this investigation very closely from the beginning. We believe that China’s measures are unfair and do not comply with the international rules in force,” said Olaf Gill, Commission Trade Spokesman, regarding China’s decision to impose tariffs of up to 34.9% on cognac from EU countries from tomorrow 5 July.

During the regular press conference, he spoke of “a disappointing development”, while stressing, regarding the investigation cited by China’s side, that “the Commission has intervened repeatedly to defend and support the EU industry, expressing growing concerns and raising objections about the clear shortcomings in the conduct of the investigation”, noting that none of the concerns identified have actually been confirmed.

“Unfortunately, these measures are also part of a disturbing pattern of abuse of trade defence instruments by China, which is initiating and conducting investigations based on questionable allegations and insufficient evidence.”

He said the EU would assess the situation and take its next steps. “We will carefully study these measures and assess the next steps in order to best protect EU industry and the economic interests of the Union.”

Meanwhile, on the US tariffs front, with the July 9 deadline approaching, he stressed that “negotiations are at a delicate stage”. As Mr. Gill made known, the European Trade Commissioner responsible for the negotiations is returning from the US today and “will have talks with the representatives of the EU member states on the state of the negotiations and, when we receive their views, we will carefully assess how to proceed to the next step.”

Paris initially reacted strongly against the Chinese decision, but French Foreign Minister Jean-Noel Barrot spoke of “a positive step” this afternoon on Beijing’s decision to close the investigation into European brandy, with a very wide range of exceptions. “However, many important points remain unresolved, in particular the exclusion of certain agents from the scope of the exemptions,” Barrot said, adding that he would discuss the issue when he meets his Chinese counterpart Wang Yi later today in Paris.