The call for World Trade Organization consultations has been initiated by the European Commission due to China’s anti-subsidy investigation into the European Union’s dairy exports. The Commission argues that this investigation is based on questionable allegations and urges China to end it immediately. As a response to this, consultations will take place at the WTO to settle the dispute. The probe, which was launched by the Chinese Commerce Ministry, targets subsidies in the production of various dairy products in several EU member states including Austria, Belgium, and Italy.
The dispute between the EU and China stems from the EU’s proposal to impose additional tariffs on electric vehicles imported from China. The EU has accused China of subsidizing its EVs to artificially lower prices, creating unfair competition for European companies. China has vehemently denied these allegations and has retaliated by launching investigations into sensitive EU exports such as dairy, pork, and brandy. Despite diplomatic efforts to resolve the dispute, tensions remain high between the two sides.
Efforts to negotiate a resolution to the EV dispute were evident when Valdis Dombrovskis, the EU’s executive vice president for trade, met with China’s minister of commerce last week. While the meeting did not result in a breakthrough, both sides agreed to intensify talks. The EU is expected to hold a crucial vote on the EV proposal by the end of October. The EU is determined to protect its Common Agricultural Policy (CAP), a significant subsidy program for EU farmers, from the Chinese investigation and potential tariffs.
The European Dairy Association (EDA) has welcomed the EU Commission’s decision to challenge China’s anti-subsidy investigation into EU dairy exports. The EDA expressed concerns about the additional administrative burden this probe has placed on dairy producers in Europe. Despite the EU’s efforts to resolve the issue, the EDA remains cautious about the impact of trade tensions between the EU and China. In 2021, the EU exported €1.76 billion worth of dairy products to China, with Ireland being the leading exporter.
In response to the ongoing dispute, the European Commission has denounced China’s actions as an abuse of proceedings and has pledged to vigorously challenge the investigation in all available venues. This is the first time the EU has called for WTO consultations in the initial stage of an anti-subsidy investigation. The EU is determined to protect its farmers and dairy industry from the effects of the Chinese probe and potential tariffs. Despite efforts to resolve the dispute diplomatically, tensions between the EU and China remain high, with both sides striving to find a balanced solution to the issue.
