By Joe Cash
BEIJING (Reuters) -China announced the next step in its anti-dumping investigation into European brandy imports on Friday, ramping up tension on the day the European Commission's provisional tariffs on Chinese-made electric vehicles take effect.
Ahead of the bloc confirming tariffs of up to 37.6% on Chinese-made EVs on Thursday, a commerce ministry spokesperson told a news conference that Brussels and Beijing should keep negotiating, but kept the prospect of retaliation was alive with a reference to another investigation into EU pork imports.
On Friday, the commerce ministry said it would hold a hearing on July 18 to discuss claims that European brandy producers are selling into China at below market rates.
Companies behind major brands Martell, which is owned by Pernod Ricard (EPA:PERP), Remy Martin which is part of Remy Cointreau, and Hennessey, owned by LVMH, will attend the meeting in Beijing for their first chance to defend themselves in person, an industry source said.
The hearing was requested by cognac houses Martell, Societe Jas Hennessy & Co., Remy Martin and other stakeholders, the ministry said in a statement.
China has repeatedly urged the EU to cancel its EV tariffs and said it is willing to negotiate. Already stung by U.S. tariffs, it has said it does not want to be embroiled in another tariff war, but would take all steps to protect its firms.
There is a four-month window during which the EV tariffs are provisional and intensive talks are expected to continue between the two sides.
The hearing on European brandy will be held two days before the deadline set by Brussels for EV makers to comment on the provisional EV tariffs.
In January, Beijing opened a tit-for-tat anti-dumping investigation into European brandy imports and in June launched a second probe into pork shipments from the bloc of 27 countries, while Brussels looked into whether China's EV makers benefited from unfair subsidies.
China's state-backed Global Times newspaper has reported that officials are considering opening an anti-subsidy probe into European dairy imports and imposing tariffs on large-engined petrol cars made in Europe.
Analysts say China chose brandy and pork to persuade France and Spain, which have been among the firmest backers of EU curbs, to join countries such as Germany, whose automakers made a third of their sales in China last year. It reportedly wants the Commission to stop the tariffs.
Italy, which has also indicated it would back tariffs, sent Adolfo Urso, its economic development minister, to Beijing, where China's industry ministry said he met his counterpart Jin Zhuanglong on Friday.
Jin told Urso China was willing to work with Italy in areas such as automobiles, ships and small and medium-sized enterprises, the ministry said in a statement.
'SHOW SINCERITY'
After the Commission confirmed the provisional tariffs would take effect from Friday, the Global Times published an editorial urging Brussels to consider European automakers' opposition to the curbs, as well as a separate article calling on Brussels to "show sincerity" in talks to find a negotiated settlement.
The newspaper also called attention to U.S. EV maker Tesla (NASDAQ:TSLA)'s manufacturing plant in Shanghai, broadening its call for protest against the tariffs.
Beijing had hoped Brussels would scrap plans to impose the curbs ahead of July 4, but the Commission said at the time China would need to come to the talks with a roadmap "addressing the injurious subsidisation" of its EV industry.
China has accused the Commission of using its anti-dumping probe to snoop on Chinese companies' supply chains, the efficiency of which Beijing maintains gives it the upper hand in cheaply turning out electric cars, among other reasons.
In its report on its nine-month EV investigation, Brussels detailed reluctance by the Chinese government and state-owned automaker SAIC to cooperate with the investigation.
On Friday, Reuters exclusively reported the European Commission has begun canvassing the region's semiconductor industry for its views on China's expanded production of older generation computer chips.
SAIC Motors meanwhile said it would officially request a Commission hearing on its provisional tariffs, adding that Brussels' investigation involved commercially sensitive information.
Geely and BYD (SZ:002594) did not immediately respond to a request for comment on whether they would make similar requests.
Chinese EV makers' Hong Kong-listed shares fell on Friday, led by Geely Automobile, which dropped 4.1% to HK$8.34, its lowest since March 7.
Geely Automobile's unlisted parent, Geely, faces additional duties of 19.9%, on top of the EU's standard 10% duty on car imports.
Chinese brands MG and NIO suggested on Thursday they might raise prices in Europe this year, in response to the curbs.