EU Dairy Industry Braces for Chinese Anti-Subsidy Probe Amid Escalating Trade Tensions
Source: DairyNews.today
The Chinese Ministry of Commerce has launched a significant anti-subsidy investigation targeting specific dairy imports from the European Union (EU), further intensifying trade tensions between the two major economies.
The investigation, which has the potential to disrupt the global dairy market, was initiated following a formal complaint by the Dairy Association of China and the China Dairy Industry Association. These groups allege that EU subsidies have created an uneven playing field, allowing lower-priced EU dairy products to dominate the Chinese market.
The probe will scrutinize 20 EU subsidy programs, many of which are tied to the Common Agricultural Policy (CAP). These subsidies include basic income support, incentives for young farmers, and national schemes in countries such as Ireland, Austria, and Italy. Chinese dairy producers argue that these subsidies artificially reduce the production costs of EU dairy products, putting local competitors at a disadvantage.
Chinese authorities have stated that the decision to proceed with the investigation followed consultations with the EU government on August 14. The probe encompasses a wide range of dairy products, including cheese, curd, milk, and cream, and could lead to significant tariffs or restrictions on EU dairy imports, further straining trade relations.
This investigation comes on the heels of China's recent anti-dumping inquiry into EU pork imports, which was announced in June. Both actions are widely perceived as retaliatory measures in response to the EU's probe into Chinese electric vehicles.
EU's Response to the Probe
Olof Gill, spokesperson for trade and agriculture at the European Commission, expressed confidence that the EU's subsidy programs comply with international rules and do not harm the Chinese dairy industry. "The Commission will now analyze the available information and will follow the proceedings very closely, in coordination with the EU industry and member states," Gill stated. He also emphasized that this is the third such action by China in recent months, following probes into EU pork and brand imports. The Commission, he added, will examine these actions to assess any potential misuse of Trade Defence Instruments and take appropriate steps to protect EU interests.
Alexander Anton, Secretary General of the European Dairy Association (EDA), voiced confidence in the WTO compliance of the CAP's support mechanisms for EU agriculture. He assured that the EDA would collaborate closely with the relevant EU Commission services, Chinese authorities, and Chinese dairy partners to address the dairy component within the consultation process. Anton expressed hope for a constructive resolution, similar to past disputes between the EU and China.
Dutch dairy cooperative FrieslandCampina indicated its readiness to cooperate with the investigation, stating, "We will provide the necessary information related to the investigation, if requested, in accordance with laws and regulations."
Impact on Irish Dairy Exports
Ireland, a significant exporter of dairy products to China, is closely monitoring the situation. In 2023, Irish dairy exports to China totaled €426 million (US$487 million), accounting for 66% of all Irish agricultural exports to China. The Irish Department of Agriculture, Food and the Marine (DAFM) noted that approximately €46 million of these exports could be affected by the investigation. Irish officials are working with the European Commission to ensure that all relevant data is provided to address any issues raised in the investigation.
Conor Mulvihill, Director of Dairy Industry Ireland, emphasized that Irish dairy exports are fully compliant with EU and WTO rules. He acknowledged the potential threat of trade disruption but noted that Irish dairy is well diversified in its product mix and destination countries. Mulvihill pointed out that the current Chinese complaint primarily concerns a subsector of dairy products, such as cheeses, with most Irish cheese exports directed to the UK and EU markets.
Scope and Timeline of the Investigation
The Chinese Ministry of Commerce’s investigation aims to determine whether EU dairy subsidies constitute unfair trade practices and whether countervailing measures are necessary. The initial timeline for the investigation sets its completion date for August 21, 2025, with a possible six-month extension. The probe will focus on imports from April 1, 2023, to March 31, 2024, and will assess potential industry injury dating back to January 2020.
Interested stakeholders, including EU governments and businesses, have 20 days to register and participate in the investigation. The Chinese ministry will collect data through questionnaires, hearings, and site inspections, seeking input from all relevant parties.
In parallel, the EU has initiated its own anti-dumping investigation into Chinese lysine imports, following a complaint from a French lysine producer. The investigation will cover the period from January to December 2023 and will analyze injury trends extending back to January 2020. This probe is part of the ongoing scrutiny of Chinese exports to the EU, adding another layer to the complex trade relations between the two regions.
As these investigations unfold, both the EU and China will need to navigate the delicate balance between protecting their domestic industries and maintaining their trade relationship.
The probe will scrutinize 20 EU subsidy programs, many of which are tied to the Common Agricultural Policy (CAP). These subsidies include basic income support, incentives for young farmers, and national schemes in countries such as Ireland, Austria, and Italy. Chinese dairy producers argue that these subsidies artificially reduce the production costs of EU dairy products, putting local competitors at a disadvantage.
Chinese authorities have stated that the decision to proceed with the investigation followed consultations with the EU government on August 14. The probe encompasses a wide range of dairy products, including cheese, curd, milk, and cream, and could lead to significant tariffs or restrictions on EU dairy imports, further straining trade relations.
This investigation comes on the heels of China's recent anti-dumping inquiry into EU pork imports, which was announced in June. Both actions are widely perceived as retaliatory measures in response to the EU's probe into Chinese electric vehicles.
EU's Response to the Probe
Olof Gill, spokesperson for trade and agriculture at the European Commission, expressed confidence that the EU's subsidy programs comply with international rules and do not harm the Chinese dairy industry. "The Commission will now analyze the available information and will follow the proceedings very closely, in coordination with the EU industry and member states," Gill stated. He also emphasized that this is the third such action by China in recent months, following probes into EU pork and brand imports. The Commission, he added, will examine these actions to assess any potential misuse of Trade Defence Instruments and take appropriate steps to protect EU interests.
Alexander Anton, Secretary General of the European Dairy Association (EDA), voiced confidence in the WTO compliance of the CAP's support mechanisms for EU agriculture. He assured that the EDA would collaborate closely with the relevant EU Commission services, Chinese authorities, and Chinese dairy partners to address the dairy component within the consultation process. Anton expressed hope for a constructive resolution, similar to past disputes between the EU and China.
Dutch dairy cooperative FrieslandCampina indicated its readiness to cooperate with the investigation, stating, "We will provide the necessary information related to the investigation, if requested, in accordance with laws and regulations."
Impact on Irish Dairy Exports
Ireland, a significant exporter of dairy products to China, is closely monitoring the situation. In 2023, Irish dairy exports to China totaled €426 million (US$487 million), accounting for 66% of all Irish agricultural exports to China. The Irish Department of Agriculture, Food and the Marine (DAFM) noted that approximately €46 million of these exports could be affected by the investigation. Irish officials are working with the European Commission to ensure that all relevant data is provided to address any issues raised in the investigation.
Conor Mulvihill, Director of Dairy Industry Ireland, emphasized that Irish dairy exports are fully compliant with EU and WTO rules. He acknowledged the potential threat of trade disruption but noted that Irish dairy is well diversified in its product mix and destination countries. Mulvihill pointed out that the current Chinese complaint primarily concerns a subsector of dairy products, such as cheeses, with most Irish cheese exports directed to the UK and EU markets.
Scope and Timeline of the Investigation
The Chinese Ministry of Commerce’s investigation aims to determine whether EU dairy subsidies constitute unfair trade practices and whether countervailing measures are necessary. The initial timeline for the investigation sets its completion date for August 21, 2025, with a possible six-month extension. The probe will focus on imports from April 1, 2023, to March 31, 2024, and will assess potential industry injury dating back to January 2020.
Interested stakeholders, including EU governments and businesses, have 20 days to register and participate in the investigation. The Chinese ministry will collect data through questionnaires, hearings, and site inspections, seeking input from all relevant parties.
In parallel, the EU has initiated its own anti-dumping investigation into Chinese lysine imports, following a complaint from a French lysine producer. The investigation will cover the period from January to December 2023 and will analyze injury trends extending back to January 2020. This probe is part of the ongoing scrutiny of Chinese exports to the EU, adding another layer to the complex trade relations between the two regions.
As these investigations unfold, both the EU and China will need to navigate the delicate balance between protecting their domestic industries and maintaining their trade relationship.
