Mike Shedlock
In retaliation for ridiculous EU tariffs on solar panels (sponsored mainly by France over the objections of Germany) China Declares War On Wine.

Via Mish-modified Google translate from El Economista ...
The Chinese government has decided to launch an investigation into the European wine sector with the later intention to apply a punitive tax if necessary, as China authorities accuse wine producers in the European Union (EU) of unfair trade tactics such as dumping and subsidies.

The temporary imposition of a tariff on Chinese solar panels by the EU started a trade war whose greatest victim is wine.

"This is a thorough research on European wines for export, in all formats, is bottled in barrels or in bulk," say sources familiar with the process, which warned that the wineries are going to have to face a complicated process and urgent administrative that could derail Asian exports. And that is bad news for an industry whose sales in their home markets is already complicated by the financial crisis.

Chinese authorities have given wine exporters 20 days to register as companies subject to investigation, and if they are not registered before July 21, China will automatically apply a punitive percentage.

No One Wins a Trade War

Should the EU be stupid enough to press the matter further, China would likely respond in kind.

For example China could threaten to place tariffs on cars from Germany or better yet Airbus planes (manufactured in a consortium of countries including France).

Strong retaliation might drive home the point, but don't count on it. Never underestimate the stupidity of EU bureaucrats who think they can impose their wishes on the market.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com



Mike Shedlock

Mike Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management.
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