China formally began an investigation on Monday into whether Europe is selling wine in China below cost, a response to escalating trade tensions with the EU.
The Chinese government said it would seek to determine if EU producers benefited from unfair subsidies following a complaint from its own wine producers.
EU officials have said China is only targeting the EU wine industry in retaliation for a dispute with the EU over cheap Chinese solar panels.
A European Commission spokesman said he was disappointed to learn of China’s latest action and that the Commission, the EU executive, would examine whether it was consistent with WTO rules.
WTO rules prevent members from leveling tit-for-tat sanctions, instead requiring proof assembled via thorough investigation that a country’s industry has suffered damage before any duties can be imposed.
In its announcement on Monday, China’s Ministry of Commerce said its inquiry, expected to last at least a year, would meet the relevant WTO rules.
“The Ministry of Commerce will follow the principles of openness, fairness and transparency, fully respect all parties’ legal rights, and make a fair ruling based on objective fact and the relevant laws and regulations,” it said.
The EU accuses Chinese manufacturers of dumping billions of euros’ worth of solar panels in Europe at below-production cost.
It levied punitive tariffs on Chinese solar panels last month and has warned the duties will rise further unless a negotiated solution is reached by early next month.
EU Trade Commissioner Karel De Gucht, in China last month for talks, said he hoped any agreement on solar panels would help to resolve the wine dispute. EU officials deny the dumping of wine in China or subsidizing exports.
The EU is China’s most important trading partner, while for the EU, China is second only to the US.
Chinese exports of goods to the bloc totaled 290 billion euros (US$377 billion) last year, with 144 billion euros going the other way.
Wine sales are only a small fraction of overall EU exports, but China’s rapidly expanding middle classes have a growing thirst for European wines, especially those from France.
China has become the biggest importer of Bordeaux wines, whose consumption rose by 110 percent in 2011 alone.