Market Reactions to China’s Anti-Subsidy Investigation into European Dairy Imports
Source: DairyNews.today
China has initiated an anti-subsidy investigation targeting dairy imports from the European Union, a move that has sparked significant market reactions. This investigation, reported by Reuters, was launched a day after the European Union revised its tariff plan on China-made electric vehicles (EVs), lowering the proposed punitive duties to 36.3% from an initial 37.6%.
The timing of this probe, focusing on cheese, milk, and cream intended for human consumption, has raised concerns, especially after Beijing had previously urged Brussels to abandon the tariffs.
European Union Chamber of Commerce in China
The European Union Chamber of Commerce in China has expressed its concerns over the escalating use of trade defense measures between the EU and China. In a statement, the Chamber remarked, "Regrettably, the use of trade defense instruments by one government is increasingly being responded to seemingly in kind by the recipient government." The Chamber noted that China’s decision to launch an anti-subsidy probe following the European Commission’s findings on Chinese EVs should not come as a surprise. The Chamber emphasized its intention to closely monitor the investigation, advocating for a fair and transparent process, and urged its member companies to fully cooperate.
FrieslandCampina’s Response
Dutch dairy cooperative FrieslandCampina, which has a significant presence in the Chinese market, acknowledged the investigation. A company spokesperson stated, "Naturally, we will provide the necessary information related to the investigation, if requested, in accordance with laws and regulations." FrieslandCampina, known for its specialized nutrition products, including infant nutrition, also operates a smaller business segment focusing on condensed milk products and creamers for the business-to-business market in China.
Impact on Irish Dairy Exports
The Irish Farmers’ Association (IFA), representing the largest farming lobby group in Ireland, has raised alarms about the potential impact of the investigation on Irish dairy exports. Tadhg Buckley, Director of Policy and Chief Economist at the IFA, highlighted that the probe is predominantly targeting "cheese, cream, and other related processed cheese, blue cheeses, and cheeses of that type." Buckley estimated that these products accounted for approximately €45 million of the €430 million worth of Irish dairy exports to China last year. He expressed concern that if the investigation extends beyond these products, particularly into specialized powders used for nutritional purposes, it could pose a much more significant challenge for Irish exporters. A trade delegation from Ireland is scheduled to visit China later this month to address these concerns.
Irish Government’s Position
Ireland’s Minister for Agriculture, Food, and the Marine, Charlie McConalogue, has pledged to work closely with the EU Commission to ensure that all necessary data is provided to address any issues raised in the investigation. McConalogue asserted, "I am satisfied that European and Irish dairy exports are fully compliant with World Trade Organisation Rules."
Analysis by Mercator Institute for China Studies
Jacob Gunter, Lead Economy Analyst at the Mercator Institute for China Studies, provided a broader perspective on the situation. He noted that while EU dairy exports to China total around €1.7 billion, this represents less than 1% of the EU’s total exports to China. Therefore, even if tariffs were imposed that effectively blocked all dairy trade, the overall impact on EU exports would be relatively small. However, Gunter warned that the impact would be felt more acutely by the biggest exporters to China, including those from Ireland, Finland, Spain, and Italy. He highlighted that China has been ramping up its own dairy production, reducing its reliance on imports. Gunter predicted that more replaceable dairy products, such as butter, milk, milk powder, cream, and common cheeses, would be most affected by potential tariff hikes, as these products could face stiffer competition from alternatives in the US, Canada, Australia, and New Zealand. In contrast, high-end and specialized European cheeses may remain in demand, though their price competitiveness could be challenged.
As the investigation unfolds, stakeholders across the EU’s dairy industry are bracing for potential disruptions, while also preparing to navigate the complexities of international trade relations.
European Union Chamber of Commerce in China
The European Union Chamber of Commerce in China has expressed its concerns over the escalating use of trade defense measures between the EU and China. In a statement, the Chamber remarked, "Regrettably, the use of trade defense instruments by one government is increasingly being responded to seemingly in kind by the recipient government." The Chamber noted that China’s decision to launch an anti-subsidy probe following the European Commission’s findings on Chinese EVs should not come as a surprise. The Chamber emphasized its intention to closely monitor the investigation, advocating for a fair and transparent process, and urged its member companies to fully cooperate.
FrieslandCampina’s Response
Dutch dairy cooperative FrieslandCampina, which has a significant presence in the Chinese market, acknowledged the investigation. A company spokesperson stated, "Naturally, we will provide the necessary information related to the investigation, if requested, in accordance with laws and regulations." FrieslandCampina, known for its specialized nutrition products, including infant nutrition, also operates a smaller business segment focusing on condensed milk products and creamers for the business-to-business market in China.
Impact on Irish Dairy Exports
The Irish Farmers’ Association (IFA), representing the largest farming lobby group in Ireland, has raised alarms about the potential impact of the investigation on Irish dairy exports. Tadhg Buckley, Director of Policy and Chief Economist at the IFA, highlighted that the probe is predominantly targeting "cheese, cream, and other related processed cheese, blue cheeses, and cheeses of that type." Buckley estimated that these products accounted for approximately €45 million of the €430 million worth of Irish dairy exports to China last year. He expressed concern that if the investigation extends beyond these products, particularly into specialized powders used for nutritional purposes, it could pose a much more significant challenge for Irish exporters. A trade delegation from Ireland is scheduled to visit China later this month to address these concerns.
Irish Government’s Position
Ireland’s Minister for Agriculture, Food, and the Marine, Charlie McConalogue, has pledged to work closely with the EU Commission to ensure that all necessary data is provided to address any issues raised in the investigation. McConalogue asserted, "I am satisfied that European and Irish dairy exports are fully compliant with World Trade Organisation Rules."
Analysis by Mercator Institute for China Studies
Jacob Gunter, Lead Economy Analyst at the Mercator Institute for China Studies, provided a broader perspective on the situation. He noted that while EU dairy exports to China total around €1.7 billion, this represents less than 1% of the EU’s total exports to China. Therefore, even if tariffs were imposed that effectively blocked all dairy trade, the overall impact on EU exports would be relatively small. However, Gunter warned that the impact would be felt more acutely by the biggest exporters to China, including those from Ireland, Finland, Spain, and Italy. He highlighted that China has been ramping up its own dairy production, reducing its reliance on imports. Gunter predicted that more replaceable dairy products, such as butter, milk, milk powder, cream, and common cheeses, would be most affected by potential tariff hikes, as these products could face stiffer competition from alternatives in the US, Canada, Australia, and New Zealand. In contrast, high-end and specialized European cheeses may remain in demand, though their price competitiveness could be challenged.
As the investigation unfolds, stakeholders across the EU’s dairy industry are bracing for potential disruptions, while also preparing to navigate the complexities of international trade relations.
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