China Launches Anti-Subsidy Probe Into European Dairy Imports

Beijing has already started retaliatory competition inquiries into politically sensitive European imports of cognac and pork.

Chinese authorities opened an anti-subsidy inquiry into dairy imports from the European Union on Wednesday, the most recent indication of the growing trade tensions between Beijing and Brussels.

As part of its investigation into what it saw as artificially cheap cars that presented a danger to jobs in Europe’s motor sector, the European Commission revealed revised taxes on Chinese electric vehicles the day before China’s commerce ministry announced.

According to the China Chamber of Commerce to the EU, Beijing’s investigation was launched following a complaint from the nation’s dairy industry on July 29. It stated that consultations with the EU had taken place on August 14.

China will examine twenty subsidy programs supporting milk, cream, and cheese production in 8 EU countries, including dairy storage, young farmers’ allowances, supplemental income, and agricultural policy subsidy programs.

The investigation is in the list of countries, which includes Ireland for subsidies related to dairy equipment, Austria and Belgium for loan schemes, Italy for dairy subsidies and livestock insurance schemes, Croatia for subsidies associated with livestock producers, Finland for three different forms of farming support, Romania for subsidies related to livestock, and the Czech Republic for a farm damage subsidy scheme.

Based on the data from the Irish government, Ireland is the biggest single exporter of dairy to China, with over €423m (£360m) worth of sales in 2023, which included dried milk formula for infants.

Dairy Industry Ireland represents Irish dairy producers, whose director, Conor Mulvihill, stated that Irish dairy is well diversified in its product mix and destination countries, but any threat of trade disruption is unwelcome. China is a significant market for both EU and Irish dairy products.

The anti-subsidy investigation on dairy announced by China’s commerce ministry on Wednesday, the latest in a series of Chinese probes this year into EU agricultural goods, will focus on various types of cheeses, milk, and creams intended for human consumption.

He also pointed out that his investigation was only for the subsector of the dairy market. According to the official statement, it includes fresh cheese, whey cheese, curd, blue cheese, processed cheese, and other unlisted cheeses.

Beijing has already started retaliatory competition inquiries into politically sensitive European imports of cognac and pork.

The European Commission declared that it was aware of China’s decision to begin looking into specific dairy products imports.

According to a spokesman, the Commission will now review the application and closely monitor the process in collaboration with the EU industry and member states.

The European Union’s dairy industry and the common agricultural policy will be fiercely defended by the Commission, which will also take appropriate action to ensure that the investigation fully complies with all applicable World Trade Organization (WTO) regulations.

Josep Borrell, the top EU diplomat, cautioned this week that a trade war might be unavoidable but that the EU should avoid a systemic confrontation with China.

In addition to the current 10% EU tax on cars, Chinese automakers that have failed to cooperate with the EU’s inquiry into electric vehicles may face a tariff of up to 36.3% by the end of October.

The European Commission, after the investigation, said that authorities in China have lavishly subsidized Chinese electric vehicle manufacturers at every step of the production process, driving down the price of the vehicles to such an artificial level that rivals in Europe might eventually be forced to close factories and lay off workers.

The Commerce Ministry of China responded by stating they would firmly oppose and were highly concerned about the results. They affirmed to take essential measures to safeguard Chinese firms.

EU officials have launched independent anti-dumping investigations into Chinese-made wind turbines and solar panels.