In the news: Wine import tax and why the coast is still best
June 14, 2013 | BY
clpstaff &clp articles &The Ministry of Commerce has retaliated against EU solar tariffs with an investigation into European wine imports and a closer look at why foreign investors are still considering the coast for manufacturing despite soaring costs
The Ministry of Commerce (MOFCOM) announced it has launched an investigation into European Union (EU) wine imports. The move comes a day after the European Commission decided to levy tariffs on China's solar panel products. France, Italy, Portugal and Lithuania voted for the anti-dumping taxes of 11.8% until August and then 47.6% for four months.
The investigation may lead to large tariffs being placed on European wines. The European Union's trade commissioner Karel De Gucht, who owns a 50% stake in a wine-producing estate in Italy, made the announcement on Tuesday in Brussels. 27 EU countries exported $980.7 million worth of wine to China in 2012, with France making up a large percentage of those exports.
This is clearly a retaliatory move. China is not happy with the solar panel tariffs and is choosing to express this anger by potentially harming the multimillion dollar wine exports to China from the EU. The fact that MOFCOM has merely launched an investigation means there is room for dialogue. The European Commission may have to re-evaluate its solar panel tariff in order to end this dispute.
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Steve Dickinson argues that manufacturing in China's coastal regions is still attractive to foreign buyers for two main reasons. First, the coast has a manufacturing support base already in place. This includes ports, rail and road networks. Second, there is the ability to implement complex production plans that cannot be matched elsewhere.
Many thought China's interior regions would benefit from manufacturing as wages soar along the coast. Dickinson believes this is not the case and puts forward that purchase contracts between buyers and manufacturers are becoming long-term agreements. This standardises the whole process as retailers are no longer willing to forgo late shipments or defective products because of cheap labour – because it no longer exists on the coast.
Dickinson's comments are highly practical and he provides the statistics to back up his claim. It is a little too early to judge if China's interior will take off but, as more money goes into developing infrastructure there, some companies will be tempted to make the move. His argument about the increasing sophistication of contracts is strong and it will be interesting to see if manufacturers in the interior agree to the same contracts on the coast as a way to attract deals.
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