China launches anti-subsidy investigation into EU dairy imports, escalating trade tensions

CHINA – The Chinese Ministry of Commerce has launched a high-profile anti-subsidy investigation into specific dairy imports from the European Union (EU), intensifying trade tensions between China and Europe. 

The probe, initiated after complaints from the Dairy Association of China and the China Dairy Industry Association, accuses the EU of providing unfair subsidies that lower the cost of EU dairy products, allowing them to flood the Chinese market at reduced prices.

This investigation, which could have far-reaching consequences for the global dairy industry, focuses on 20 EU subsidy programs, including several linked to the Common Agricultural Policy (CAP). 

These subsidies, ranging from basic income support to incentives for young farmers, are said to artificially lower EU production costs, harming local Chinese producers. Countries such as Ireland, Austria, and Italy are central to the inquiry.

The Chinese government confirmed that consultations with the EU preceded the decision to launch the probe, which encompasses a wide range of dairy products, such as milk, cheese, curd, and cream. 

The investigation could lead to imposing tariffs or restrictions on EU dairy imports, further straining trade relations. 

This comes after China’s recent anti-dumping inquiry into EU pork imports, widely seen as a retaliatory move following the EU’s probe into Chinese electric vehicles.

Olof Gill, spokesperson for trade and agriculture at the EU Commission, expressed confidence that the CAP subsidies comply with international trade rules and do not harm China’s dairy industry. 

He noted that this is China’s third trade action against the EU in recent months. The Commission plans to scrutinise China’s actions and respond accordingly to protect EU interests.

The European Dairy Association (EDA) also weighed in, with Secretary General Alexander Anton affirming that the CAP framework is WTO-compliant. He expressed optimism that China and the EU will find a constructive solution to the dispute. 

One of the EU’s largest dairy exporters to China, FrieslandCampina, pledged full cooperation with the investigation while Irish dairy officials closely monitor the situation. 

Ireland, whose dairy exports to China totalled €426 (US$470) million in 2023, is particularly concerned, as €46 (US$50.7) million of its exports may be affected by the probe. Irish officials are working with the EU Commission to ensure accurate data is presented to resolve the issue.

The investigation, set to conclude by August 2025, could be extended by six months. It will focus on dairy imports from April 2023 to March 2024 while assessing potential industry injuries dating back to 2020.

Meanwhile, the EU has launched its investigation into Chinese lysine exports, signalling continued trade friction between the two major economies.

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