The wine industries of China and the European Union (EU) have reached an agreement which will open the door to increased import of European wine into China. The European Committee of Wine Companies (CEEV) and the Chinese Alcohol Drinks Association (CADA) opened a “Business to Business” (B2B) dialogue between the competing industries to come to an agreement which benefits all parties. The terms of the agreement are such that China withdraws its anti-dumping and anti-subsidy complaints against the EU and in return the EU will provide technical assistance to Chinese winemakers. China hopes to improve its domestic winemaking ability, and will be able to capitalize on the superior winemaking knowledge out of Europe through training on quality control, mechanization techniques, and even wine tastings. The EU, on the other hand, will be able to take advantage of the rapidly-growing market for wine in China; as part of the agreement, the Chinese wine industry will organize tastings of EU wine.
“Dumping” is a technique sometimes used in international commercial transactions; essentially, this is when a company or industry from one nation exports its products to another nation, where it then sells the products at below-market rate or, sometimes, at a rate below what it costs the company to produce the product. It is often done to squeeze the market, thereby driving out domestic competition. Once the competition is eliminated, the prices are raised. Countries may enact anti-dumping regulations, which may including protectionist tariffs that can exceed 100 percent. Anti-subsidy, on the other hand, are similar protectionist measures which are meant to combat domestic subsidies given to an industry, which result in an unfair advantage when the product is sold internationally.
Who do you think came out better from this agreement: China or the EU? What would have been the result had an agreement not been reached and the dispute gone to the WTO? Will Chinese producers be hurt having to compete with European wines?
Source: European Commission
Photo Source: Jing Daily