China has launched an anti-subsidy investigation into dairy imports from the European Union, the latest development in a tit-for-tat trade dispute between the two sides.
The probe will target several dairy products, including fresh and processed cheese, the Chinese Ministry of Commerce said in a statement yesterday. EU dairy exports to the nation were valued at 1.7 billion euros (US$1.9 billion) last year, official figures showed.
The latest move escalates a growing tussle over subsidies that started with electric vehicles and spread to pork and cognac. Earlier this year, the EU determined that Chinese subsidies had given the country’s carmakers an unfair cost advantage over local companies, and it moved forward with added tariffs on battery-electric vehicles shipped from China.
Photo: Pedro PARDO, AFP
The bloc said on Tuesday it intended to move forward with the import levies, and it also announced tariffs on Tesla Inc cars made in China.
The dairy probe, initiated at the request of industry groups in China, will review 20 EU subsidy programs, including some under the Common Agricultural Policy and others available in Italy and Finland, the ministry said. The investigation is expected to be completed within a year and can be extended for another six months under special circumstances.
China imports dairy products from European nations, including the Netherlands and France, but New Zealand is its top supplier. The Asian nation’s purchases have fallen in recent years due to rising domestic production and an economic downturn.
The European Commission notes China’s investigation and plans to “firmly defend the interests of the EU dairy industry,” spokesman Olof Gill said. It will intervene as appropriate to ensure the investigation complies with relevant WTO rules, he said.
EU leaders have stepped up efforts to defend against what they view as unfair trade practices, bringing their China policy closer to that of the US. Beijing’s relationship with the bloc has soured in recent months as a result.
“Following the move of an anti-dumping probe on the EU pork industry announced in mid-June, to some extent some market participants in the EU dairy industry anticipated that this could happen,” said Jose Saiz, a senior analyst at market intelligence provider Expana.
The EU wasn’t expecting strong demand from China this year anyway and was already seeking alternative markets, he said.
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