China slams EU solar duties, launches wine probe

BEIJING (AP) -- China announced a trade investigation of European wine Wednesday after the European Union hit Chinese exporters of solar panels with anti-dumping duties.

The Ministry of Commerce's announcement of the wine probe came in the same statement that expressed "resolute opposition" to punitive European tariffs on Chinese solar products. The European duties are a blow to financially strapped manufacturers that are struggling with excess production capacity and a price-cutting war.

A Foreign Ministry spokesman, Hong Lei, did not respond when asked later at a regular briefing whether the wine investigation was retaliation for the solar duties. Concern about possible retaliation rose after Chinese Premier Li Keqiang warned last month that European anti-dumping action over solar panels would harm both sides.

Most of China's imports of European wine come from France, Spain and Italy, EU statistics show, highlighting that any commercial impact would fall on countries whose governments supported the anti-dumping tariffs.

"We believe there is not dumping of European wines on the Chinese market," said a spokesman for the European Commission, Roger Waite.

In Paris, the French agriculture minister, Stephane Le Foll, denied his government subsidizes exports.

"France doesn't export at a loss or with subsidies," said Le Foll. "There is not one export subsidy."

Spanish Prime Minister Mariano Rajoy said he expected everyone within the EU to stick with the three embattled nations.

"Spain fully complies with the existing legislation. In this case, I am sure that everybody in Europe will support us, and support the French and the Italians as well," he said in Brussels.

Waite declined to say whether EU officials see the wine probe into alleged unfair subsidies and dumping practices as retaliation. But the head of a French wine exporters' group expressed alarm that the industry was caught in the dispute.

"The use of our sector as leverage in a trade dispute is particularly regrettable," said Louis Fabrice Latour, president of the Federation of Wine and Spirits Exporters of France. "We fervently hope that the European Union and China will be able to defuse these trade tensions by dialogue."

Following the 2008 global financial crisis, China along with the European Union, the United States and other major governments pledged to avoid taking action that might impede trade. But they are mired in a series of disputes over market access and possible improper subsidies.

On Tuesday, the EU announced duties averaging 47 percent on Chinese-made solar panels, cells and wafers but said it would postpone imposing the full tariffs until August to allow time for negotiation.

"We hope the European Union will further show sincerity and flexibility and a mutually acceptable solution can be found through consultations," said the Chinese statement.

German government spokesman Steffen Seibert said his country would work to de-escalate the trade dispute and avoid the imposition of permanent tariffs.

"It's not in the interest of Europe, Germany or China, to aim for a trade dispute. That's why Germany will work with the EU Commission, so that the EU Commission in close dialogue with China finds a mutual agreement," he told reporters.

Dumping means selling a product abroad at a lower price than at home but some governments also take action if the price is deemed to be below production cost or unfair in some other way.

Chinese imports of European wine rose by 60 percent a year by volume in 2009-12, according to a statement on the commerce ministry's website. It said 2012 imports totaled 25.7 million liters worth $1 billion.

The ministry said it would conduct an anti-subsidy and anti-dumping investigation of European wine but gave no details of how Beijing believed exports were being subsidized.

China accounted for 8.6 percent of European Union wine exports last year, according to EU figures. France was the biggest exporter to China, selling wine worth 546 million euros.

The trade in solar panels is many times larger than that of wine.

European imports of Chinese-made solar panels totaled 21 billion euros in 2011. EU Trade Commissioner Karel De Gucht said Chinese dumping was threatening 20,000 jobs in Europe.

Last year, the United States imposed anti-dumping tariffs of up to 250 percent on Chinese solar panels following similar complaints.

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Associated Press writers Sarah DiLorenzo in Paris, Raf Casert in Brussels and Frank Jordans in Berlin contributed to this report.

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Online:

Chinese Ministry of Commerce: www.mofcom.gov.cn