Asia Briefing: Investigation into wine pricing stokes trade tensions with EU

China has formally kicked off its investigation into whether Europe is selling wine in China below cost, its broadside in the escalating trade tensions with the European Union.

The growing middle-class market means French wine is the biggest seller in China, and China is the biggest importer of Bordeaux wines, the consumption of which rose by 110 per cent in 2011 alone.

The ministry of commerce in Beijing says it is trying to find out if EU producers benefited from unfair subsidies following a complaint from its own wine producers.

“The ministry of commerce will follow the principles of openness, fairness and transparency, fully respect all parties’ legal rights, and make a fair ruling based on objective fact and the relevant laws and regulations,” the ministry said , insisting the investigation would follow World Trade Organisation standards.

The EU and the US vie with each other to be China’s most important trading partner while, for the EU, China is second only to the US. Chinese exports of goods to the EU were €290 billion last year, with imports worth €144 billion.

EU officials believe China is only going after the EU wine industry in retaliation for a dispute with the EU over cheap Chinese solar panels.

The WTO rules prevent members from imposing tit-for-tat sanctions, instead requiring proof assembled through a thorough investigation that a country’s industry has suffered damage before any duties can be imposed.