The European Union (EU) has lodged a formal complaint with the World Trade Organization (WTO) regarding China’s decision to initiate an anti-subsidy investigation into dairy products from the EU. This marks the first time that the EU has challenged an investigation at its initial stage. The European Commission, the EU’s executive arm, stated that it took this action due to a pattern of China initiating trade defense measures based on questionable allegations and insufficient evidence within a short period of time.
China’s commerce ministry announced on August 21 that it would investigate subsidies received by European milk and cheese producers from the EU. The probe focuses on milk and cream with a fat content exceeding 10 percent, as well as various types of cheese from the EU. It includes seven subsidy programs under the EU’s Common Agricultural Policy and 13 provided by national authorities in Austria, Belgium, Croatia, Czech Republic, Finland, Italy, Ireland, and Romania.
This investigation comes shortly after Brussels revealed its revised draft decision to impose final tariffs of up to 36.6 percent on electric vehicles (EVs) manufactured in China. The dairy probe is widely seen as retaliation against this tariff hike by Brussels and raises concerns about a potential trade war between Beijing and Brussels.
China has already taken the proposed duties imposed by the EU to the WTO while launching similar anti-subsidy investigations into pork and brandy from Europe following an investigation initiated by the European Commission into Beijing’s state subsidies for EV industries last October.
In addition to these developments, there have been indications that China may target high-powered gasoline cars imported from Europe in response to proposed tariffs by Brussels. The visit of China’s commerce minister to Rome and Berlin coincides with voting among members of the EU regarding whether or not to impose five-year EV duties.
EU Trade Commissioner Valdis Dombrovskis has called for an end to investigations into pork, dairy products, and brandy during meetings with his Chinese counterpart Wang Wentao. Dombrovskis emphasized that “the EU will do its utmost” in defending its industries’ interests.
The consultation request sent by the EU marks only one step in WTO dispute settlement proceedings; if satisfactory solutions are not reached through consultations with China over this matter, officials have stated their intention to ask for a panel at WTO.
