China opens tit-for-tat trade probe into EU dairy products day after bloc’s EV tariff move

China on Wednesday announced an anti-subsidy investigation into dairy products produced in the European Union – the latest move in retaliation to the bloc’s tariff increases on Chinese-made electric vehicles (EVs). The products under investigation include fresh and processed cheese, as well as uncondensed milk and cream without added sugar or other sweeteners, according to China’s Ministry of Commerce (Mofcom). The decision came after the EU revised down countervailing duties on some Chinese EV producers a day earlier, to which Beijing still voiced strong opposition. The action on Wednesday followed Beijing’s announcement in June that it had launched an anti-dumping investigation on pork products imported from the EU. In the first seven months of the year, China imported over US$315 million of affected dairy products from the EU, according to Chinese customs. France was the top source, shipping products worth US$115 million in the period, with Italy second with US$43 million. The two countries are also key members backing the tariff increases on Chinese-made EVs. Regrettably, the use of trade defence instruments by one government is increasingly being responded to seemingly in kind by the recipient government European Union Chamber of Commerce in China The investigation had been initiated in response to an application submitted in July by the Dairy Association of China and China Dairy Industry Association for an anti-subsidy investigation. Based on the application, Mofcom said, the investigation would cover 20 subsidies benefiting the EU dairy industry and companies. Seven fall under the EU’s common agricultural policy, while the remainder come from individual members, including Belgium, Italy, Ireland, Austria, Croatia, Finland, Romania and the Czech Republic. The investigation covers imports from the start of April 2023 until the end of March, while the period for evaluating industrial damage starts from 2020 until the first quarter of 2023, Mofcom added. Having started on Wednesday, the investigation should last no more than a year, but it could be extended for a further six months, the ministry added. “Regrettably, the use of trade defence instruments by one government is increasingly being responded to seemingly in kind by the recipient government,” said the European Union Chamber of Commerce in China. China’s decision to launch an anti-subsidy probe, it added, should not be considered a surprise. “The chamber will be monitoring the ongoing investigation and hopes that it will be conducted fairly and transparently. We expect our affected member companies to cooperate to the fullest with the investigation,” added the statement. Olof Gill, European Commission spokesman for trade and agriculture, said on Wednesday that the commission had taken note of China’s dairy investigation. “The commission will now analyse the application and will follow the proceedings very closely, in coordination with EU industry and member states,” Gill said. “The commission will firmly defend the interests of the EU dairy industry and the common agricultural policy, and intervene as appropriate to ensure that the investigation fully complies with relevant [World Trade Organization] rules.” On Tuesday, the European Union’s secretariat announced a revision to its provisional duties – which were first proposed in June – on Chinese-made EVs, with a top-end rate of 36.3 per cent for companies that include state-owned SAIC, which was lowered from the initial proposal of 37.4 per cent. EVs made by BYD will face a tariff rate of 17 per cent rather than 17.4 per cent. For Geely-made EVs, the rate dropped from 20 per cent to 19.3 per cent. Another 17 companies deemed to have cooperated with the EU’s probe will face a slightly higher rate of 21.3 per cent, up from 20.8 per cent, after the commission found errors in its initial calculations. The definitive proposal will be voted on by the EU’s 27 member states in October, before being written into law for five years. It can only be reversed if a majority of countries vote against the duties. It looks like the consultations and negotiations between the two sides so far actually have had no positive effect Cui Hongjian, Beijing Foreign Studies University In an indicative vote taken in July, only four countries voted against the proposals. Of the countries with potentially market-distorting subsidy programmes named in China’s dairy probe, two voted in favour, while the rest all abstained. Earlier this month, Beijing announced that it had filed a complaint against the EU’s tariff increases on Chinese-made EVs at the World Trade Organization for arbitration. The latest proposal by the EU is “obviously not in line with China’s expectations”, said Cui Hongjian, a professor with the Academy of Regional and Global Governance at Beijing Foreign Studies University, as Beijing hopes to block the provisional tariffs from being written into law. “It looks like the consultations and negotiations between the two sides so far actually have had no positive effect,” Cui said. But Beijing’s moves have remained restrained, as it still looks to stabilise its relations with the EU, Cui added. “Whether it is electric vehicles or other fields, no matter how great its impact is on the industries, these are still relatively small issues for the entire China-EU economy and trade,” he said. “So China must respond to these disputes to show its clear position to the European side, but at the same time avoid the expansion of the negative effects on the stability of the entire economic and trade relationship. “I think this is the principle that China wants to adhere to.”

China opens tit-for-tat trade probe into EU dairy products day after bloc’s EV tariff move

.css-1mniedq{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;}Imports of fresh and processed cheese, as well as uncondensed milk and cream without added sugar or other sweeteners, will be investigated

Imports of fresh and processed cheese, as well as uncondensed milk and cream without added sugar or other sweeteners, will be investigated