The European Commission has challenged an investigation taken by authorities in China into subsidies paid under certain EU schemes to dairy producers, by taking the issue to the World Trade Organisation (WTO).
Last month. the Ministry of Commerce of China began an investigation into subsidies paid to European dairy farmers, with one Irish farm scheme specifically cited by the country’s authorities.
The basis for the investigation is that certain subsidised EU dairy products impact on the domestic dairy industry in China.
Among the 20 EU subsidy schemes cited in the investigation is an Irish scheme which is referred to (when translated into English) as the “Dairy Equipment Subsidy Scheme”. This likely refers to the Dairy Equipment Scheme under the Targeted Agricultural Modernisation Scheme (TAMS).
The investigation is seen as the latest issue in a series of trade tensions between China and the EU.
Earlier in the same week, the commission, as part of its own anti-subsidy investigation into the Chinese electric vehicle (EV) industry, announced a draft decision to impose countervailing duties on imports of battery EVs from China.
Now, the commission has responded to China’s dairy investigation by launching a consultation request at the WTO, challenging the anti-subsidy investigation against imports of certain dairy products from the EU.
This is the fist time the EU has decided to challenge an investigation of this type at such an early stage.
The commission said its decision to go to the WTO was prompted by “an emerging pattern of China initiating trade defence measures, based on questionable allegations and insufficient evidence, within a short period of time”.
The commission also said that its latest move follows through on its “commitment to firmly defend the interests of the EU dairy industry and the Common Agricultural Policy (CAP) against abusive proceedings”.
“The commission is determined to make full use of all available legal means to defend EU industry against the abuse of trade defence instruments,” the commission said.
The consultations with the WTO requested by the EU represent the first step in WTO dispute settlement proceedings.
If those consultations do not lead to a satisfactory solution, the EU could request a panel to be set up by the WTO to decide on the investigation.
The investigation by the authorities in China targets liquid milk and cream with a fat content higher than 10% and various types of cheese from the EU. Milk powder is not understood to be currently impacted.
The investigation targets subsidies under the CAP as well as certain national and regional programmes.
“The commission is confident that these subsidy schemes are fully in line with international rules and are not causing injury to the Chinese dairy industry,” the commission said.