The American Interest
Analysis by Walter Russell Mead & Staff
China Holds EU Wine Industry Hostage in Trade War

Wine

Brussels and Beijing are embroiled in a full-on trade war, and China is ready to hit the European Union where it hurts: its wineries. China is accusing French winemakers of dumping their wares in the Chinese market at prices below what it would take to make a profit. In reality, this move has little to do with the price of a bottle and everything to do with solar panels.

In a rush to jump start domestic solar industries, governments around the world have spent the past few years propping up solar companies with subsidies. China was particularly aggressive in its coddling, quickly emerging as the global leader in solar panel manufacturing. The result was a glut of solar panels in the global market, leading to the plummeting prices that have sunk several high-profile solar companies, such as America’s Solyndra and China’s Suntech.

In a bid to push prices higher and protect its domestic solar manufacturers from China’s cheap products, the European Union recently announced tariffs on Chinese panels. The threat of wine tariffs is presumably Beijing’s response. The Financial Times reports:

Davide Cucino, president of the EU Chamber of Commerce in China said: “Such a step will be widely regarded as retaliation.”

Louis Fabrice Latour, chairman of the French Federation of Wine and Spirits Exporters, which represents 85 per cent of the country’s wines and spirits shipped overseas, said the wine industry had been “taken hostage” in a wider dispute.

On Tuesday, the EU trade commissioner announced his intention to delay the solar tariff for two months, but the damage was already done.

Beijing’s itchy trigger finger with these accusations suggests more than just its desire to support the domestic solar industry or its contempt for Europe’s fine wines; it also shows that China doesn’t take the EU seriously as an economic powerhouse and believes it can throw its weight around; Beijing managed to sway 18 of 27 member states, including solar-hungry Germany, into voting against the Chinese solar panel tariff last week. That vote was non-binding on the European Commission’s decision, but it did demonstrate the reservations of many European governments about upsetting such a large trading partner.

This began as a story about a misguided green attempt to to prop up a stumbling industry, but it’s quickly becoming another tale illustrating Europe’s global impotence.

[Wine bottles image courtesy of Shutterstock]

Published on June 5, 2013 5:00 pm
  • http://www.facebook.com/people/Luke-Lea/579129865 Luke Lea

    This is getting ugly. From today’s FT:

    “China has warned that Europe’s failure to recognise that its power is on the decline is inviting further retaliation from Beijing in their escalating trade row.

    “The change of the times and the shifts of power have failed to change the condescending attitude of some Europeans,” People’s Daily, the ruling Communist party’s mouthpiece, said on Thursday. “China doesn’t want a trade war, but trade protectionism cannot but trigger a counterattack.”

    It said that Beijing could take yet more measures against the EU. “We have set the table for talks, (yet) there are still plenty of cards we can play,” the newspaper wrote.”

    I see arrogance alright. China is acting like a bull in a China shop. (And come to think of it, Xi looks like a bull.) This is what we get for letting a communist giant into WTO with no strings attached.

  • carrycash

    China is ready to European union is seem strange.But make a profit that was good idea of china.

    http://onlinecashandcarry.co.uk