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China opens EU wine probe as trade dispute spreads
by Staff Writers
Beijing (AFP) June 05, 2013

France calls for common EU stand in China trade feud
Paris (AFP) June 05, 2013 - France on Wednesday called on its European Union partners to quickly agree a united response to China's decision to open an anti-dumping probe into wine imports from Europe.

The Chinese move, ordered in retaliation for the EU's imposition of anti-dumping duties on solar panel imports from China, has raised fears of a broader trade war between the world's biggest trading bloc and the Asian superpower.

"The President of the Republic expressed his desire that the European Commission take steps to organise a meeting to establish a united position of the 27 (member states) based on solidarity," French government spokeswoman Najat Vallaud-Belkacem said after a cabinet meeting.

As the biggest exporter of wine to the fast-growing Chinese market, France has most to lose should China proceed with a move to impose anti-dumping duties on imports from the EU.

Establishing a common EU stance on the issue may prove difficult however.

While France supported the imposition of punitive duties on Chinese solar panels, the move was opposed by Germany, China's biggest trade partner in Europe.

German economy minister Philipp Roesler on Wednesday called for dialogue rather than confrontation with China and reiterated that Berlin regarded the decision on solar panels as a "serious mistake."

French Agriculture Minister Stephane Le Foll said there was no justification for China's move, insisting that EU producers did not benefit from any export subsidies.

"We have to stay calm," Le Foll added.

"Discussions are underway between Europe and China. We have to be able to find the necessary coherence to retain a simple objective: Europe cannot remain open unless a certain number of social and environmental rules are respected and without rules to avoid dumping.

"I understand the concern (of winemakers) because China is a major country where we have an extremely big and important presence."

Beijing has begun an anti-dumping probe into European wine, the commerce ministry said Wednesday after the EU imposed tariffs on solar panel imports from China, in a dramatic broadening of their trade dispute.

China is the EU's second-largest trading partner, with $546 billion in two-way business last year according to Beijing's figures, but the move widens a row that has already involved solar equipment and telecoms, chemicals and seamless pipes.

"The Chinese government has initiated an anti-dumping and anti-subsidy investigation procedure into wines from the European Union," commerce ministry spokesman Shen Danyang said in a statement.

Analysts said the dispute threatened to escalate towards a trade war.

On Tuesday the European Commission imposed anti-dumping duties on imports of Chinese solar panels, with France supporting the move in defiance of German-led opposition.

Berlin's economy minister Philipp Roesler said the move was "a serious mistake", but Paris welcomed the decision as "balanced and responsible".

Beijing's choice of wine as the target for an apparent response may have been a pointed signal.

France was the largest individual wine supplier nation to China in 2012, with 140 million litres sold worth $788 million, according to Chinese Customs figures. No figures were immediately available for total EU wine exports to the country.

On Tuesday EU Trade Commissioner Karel De Gucht said Chinese solar panels were being sold at up to 88 percent below cost in the European market and the "dumping" was harming the European industry.

As a result 25,000 jobs were threatened and the measures were not protectionist but came within the EU's rights under international trade law to protect its interests, he said.

The Commission is to levy an initial average tariff of 11.8 percent from Thursday, rising to 47.6 percent on August 6 unless negotiations begin based on a Chinese commitment to address the problem.

The Chinese commerce ministry statement did not give further details of the wine investigation, but Shen said China "firmly opposes" the EU move, describing the tariffs as "unfair taxes".

He said China's government and industry had "shown great sincerity and made enormous efforts" to resolve the issue, and that Beijing hoped "the European side will show further sincerity and flexibility".

Tao Jingzhou, managing partner of law firm Dechert LLP China said "it seems like there is a threat of a trade war", adding that would be "in the interests of no-one".

But he warned that Beijing's move could prove counter-productive as it "might well change the political balance built up so far in the EU".

Yao Wei, a Hong Kong-based economist with Societe Generale, added the EU and Chinese moves highlighted rising tensions between the economic giants. "The conflict is definitely escalating," she told AFP.

The problem was rooted in China's "huge" overcapacity in many industries, she said. "In order to digest its overcapacity, China will unavoidably intensify global trade tensions.

"It will certainly face more and more similar trade frictions, not just with the EU."

China's official news agency Xinhua said in a commentary that the solar duties will "create a lose-lose situation", calling on the Commission to "avoid wielding the baton of trade protectionism" and "safeguard" China-EU trade relations.

"China is firmly opposed to trade protectionism and abuse of trade remedy measures," it said. "There would be no winners in a trade war."

Solar firms fell on the Shanghai bourse, with EGing Photovoltaic Technology leading the declines, closing down 4.27 percent at 9.41 yuan ($1.50).

A spokesman for leading Chinese solar panel and cell producer Suntech said the company was "disappointed" by the EU move.

"Tariffs will not only penalise Chinese manufacturers, but also European system designers, integrators, project financiers, developers and, ultimately, renewable energy consumers," he told AFP.

But Chinese wine makers jumped on anticipation that duties on European wines would boost sales of domestic products, with CITIC Guoan Wine surging by its 10 percent daily limit to 5.61 yuan.

Wine importers in China expressed concerns over the potential impact.

Claudia Masueger, chief executive officer of Beijing-based wholesaler Cheers, said: "We can only hope for the best and will prepare for the worst."


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