China imposes import limitations on medical devices as a response to the EU ban
In a significant development, tensions between China and the European Union have escalated, with both parties imposing tariffs on each other's goods. The European Union has restricted Chinese-built electric vehicles and imposed tariffs on imported brandy, while China has retaliated with duties on medical devices and brandy from the bloc.
The EU's move is part of the first use of the International Procurement Instrument (IPI), a regulation that entered into force in 2022. This instrument aims to ensure reciprocal market access and is a response to China's historically protectionist policies, such as the "Made in China 2025" and "Buy China" initiatives.
The EU's restrictions on medical devices could have significant implications for global supply chains, creating both challenges and opportunities for investors. The medical device trade deficit between the EU and China has fluctuated significantly, with the EU experiencing a trade deficit that turned into a surplus in recent years.
China's countermeasures, announced by its commerce ministry, were expected after the EU's move. Starting from Sunday, the Chinese finance ministry will restrict imports of medical devices from countries containing EU-made components worth more than 50% of the contract value. This measure affects government purchases of medical devices exceeding 45 million yuan ($6.3 million).
In a separate development, China has imposed duties of up to 34.9% for five years on brandy originating in the European Union, primarily cognac from France. However, major cognac producers such as Pernod Ricard, LVMH, and Remy Cointreau were spared from the levies, but they must sell at a minimum price, which China has not disclosed.
The EU and China are due to hold a leaders' summit in China later in July. The EU has concluded that EU firms were not given fair access in China's market for medical devices, while China has expressed regret over the EU's insistence on taking restrictive measures and building new protectionist barriers.
The ongoing trade tensions and tariff discussions between the U.S. and the EU could potentially affect global trade and influence EU trade policies indirectly. The U.S. has temporarily suspended reciprocal tariffs until July 9, 2025, and the EU is considering countermeasures against U.S. tariffs, which include potential duties on U.S.-originated imports like aircraft, automobiles, and medical devices.
While the EU has not provided specific information regarding tariffs on brandy imports between China and the EU, general trade tensions and tariff discussions are ongoing, which could potentially affect alcohol imports, including brandy, in the future. This news underscores the complex and evolving nature of global trade relations.
The EU's utilization of the International Procurement Instrument (IPI) in response to China's protectionist policies has extended to the domain of business, specifically medical devices, creating potential impacts on global financial markets. Simultaneously, the political arena witnessed China's retaliation with tariffs on imported medical devices and brandy, contributing to the overall complexity and evolution of global trade relations.
