Beijing is investigating whether dairy producers in the European Union receive unfair government subsidies, marking the latest salvo in an escalating trade dispute.
China’s Ministry of Commerce said Wednesday that local dairy producers had requested the probe, citing 20 different subsidy programs that may benefit the EU dairy industry. These ranged from financial support for farming equipment and supplementary income for young farmers to environmental and administrative subsidies.
An initial review of the evidence had found sufficient grounds for an anti-subsidy investigation, the commerce ministry added in a statement. It noted that the investigation could take up to 18 months.
The EU is among the world’s largest dairy exporters and China is the second-biggest destination for its skim-milk and whole-milk powders, according to European Commission data. The United Kingdom and United States are the top two recipients of the EU’s butter and cheese exports, with China coming in third and eighth place respectively.
The announcement comes a day after the EU confirmed that it would move ahead with additional tariffs on most electric vehicles imported from China.
Beijing and Brussels have been engaged in a back-and-forth trade row for much of the past year after the EU launched an investigation into China’s “unfair” state support for EV makers last September. The EU is also probing China’s support for wind turbine companies.
China, for its part, has launched anti-dumping investigations into brandy and pork products from the EU.
Olof Gill, a spokesperson for the European Commission, said in a statement Wednesday that the EU’s executive arm would follow Beijing’s investigation “very closely” and “intervene as appropriate” to ensure the probe complied with World Trade Organization rules.
“The Commission will firmly defend the interests of the EU dairy industry and the common agricultural policy,” he added, referring to the bloc’s official program of support for farmers.
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