2024-08-21 13:11:14
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China has launched an anti-dumping investigation into dairy products imported from Europe, the latest escalation in its trade dispute with the European Union.
The investigation comes a day after the European Commission announced a series of additional taxes on electric car imports from China, despite objections from Beijing.
China’s Ministry of Commerce said on Wednesday it was launching an investigation into EU dairy imports following complaints from domestic manufacturers about EU subsidies. The investigation will cover “specific products,” including cream and cheese, according to a statement.
The move is Beijing’s strongest response yet to Brussels’ tariffs on electric vehicles. China has launched anti-dumping investigations into French cognac and EU pork imports and lodged complaints with the World Trade Organization.
The EU’s top diplomat, Josep Borrell, said at an event in Spain this week that the bloc “cannot be naive” but that a trade war “maybe … is inevitable.”
The European Commission said Brussels had “taken note” of China’s decision to launch an anti-subsidy investigation into some dairy products and would analyze the proceedings “very carefully.”
The European Commission said: “The Commission will firmly defend the interests of the EU dairy industry … and take appropriate intervention measures to ensure that the investigation is fully in line with relevant WTO rules.”
The European Union Chamber of Commerce in China said Beijing’s move was “not surprising”.
“Regrettably, one government’s use of trade defence measures is increasingly met with retaliation by the recipient government,” the chamber said, adding that it hoped the investigation “will be conducted fairly and transparently”.
The EU’s largest subsidy program is the 60 billion euro annual Common Agricultural Policy, which accounts for about a third of the EU budget.
Alexander Anton, secretary general of the European Dairy Association, said he was “confident” that CAP was in line with WTO rules and that the EU and China “will find constructive ways to resolve any bilateral dispute”.
“Long live Europe, long live milk,” he added.
Patrick Pagani, deputy secretary general of Copa Cogeca, the EU’s largest agricultural body, said farmers were “concerned about a further escalation in trade relations between the EU and China and the lasting impact on our industry”.
“Once again we see that our exports, where we are doing well, are being targeted as a result of other disputes,” he said, adding that the “most worrying” aspect was the challenge to the Common Agricultural Policy, which he called “unjustified”.
According to trade data from the European Commission, Europe’s dairy exports to China were worth about 1.8 billion euros last year, down from 2 billion euros the year before, accounting for about 9.5% of the EU’s total dairy exports.
The China Dairy Association claims that imports of EU dairy products are subject to 20 subsidy schemes. Germany is the largest producer of milk, butter and cheese in the EU, followed by France.
The Irish Creameries Milk Suppliers Association warned that the measures could be a “hard blow” at a time when dairy farmers are struggling with low prices, bad weather and years of rising input costs. Ireland exports 450 million euros worth of dairy products to China each year.
“If the EU were to start a trade dispute that would destroy our [milk] If the EU bans milk powder and butter trade with China, then ICMSA will demand compensation from the EU to farmers,” said Denis Drennan, the group’s president.
Imports will account for 44% of China’s infant formula market in 2023, down from 51% in 2019, as competition intensifies and regulation tightens, according to Rabobank.
China’s declining birth rate is also forcing domestic and foreign companies to launch new products in China, such as those targeting older consumers.
Imports of powdered and fluid milk are also down this year as domestic production increases, according to May estimates from the U.S. Department of Agriculture.
“Raw milk production growth continues to outpace consumption, resulting in an oversupply in the Chinese market,” the report said.
Additional reporting by Gloria Li in Hong Kong and Wang Xueqiao in Shanghai
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