The Chinese government has opened an anti-subsidy investigation targeting dairy products imported into the country from the EU in a move that could harm Irish trade. The decision is widely seen as a response to plans the EU has announced in recent months to levy significant tariffs on electric vehicles (EV) imported from China.
The decision to hike tariffs on EV imports from China came at the end of an investigation led by the European Commission. That inquiry concluded that China was heavily subsidising its electric car industry, which was then flooding the EU market at costs that undercut European car makers.
Growing tensions between the EU and China over electric vehicle imports have sparked concerns that tit-for-tat retaliations could escalate into a full scale trade war between the two blocs.
In a statement on Wednesday the Chinese ministry for commerce said its anti-subsidy investigation would focus on several types of cheeses, milks and creams being imported from the EU.
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The investigation will examine the Common Agricultural Policy (Cap), the EU scheme that pays subsidies to farmers, as well as several others run by individual EU countries. These include a scheme run by the Government that provides grants to Irish dairy farmers to help meet capital costs and the purchase of new equipment.
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China is an important market for the Irish dairy industry, with Ireland exporting 69,000 tonnes of dairy produce with a value of €423 million to the Asian country in 2023, according to Central Statistics Office data. Within the EU Ireland is by far the biggest exporter of dairy products to China.
However, Conor Mulvihill, head of Dairy Industry Ireland which represents the sector, played down the impact the subsidy investigation would have on the domestic industry.
“While any threat of trade disruption is unwelcome, and China is an important market for both EU and Irish dairy, Irish dairy is well diversified in its product mix and destination countries,” he said. “At present the Chinese complaint relates to a subsector of dairy products, such as cheeses. And most of our cheese exports are directed to the UK and EU markets.”
He called on the European Commission and the Government to quickly resolve the investigation.
The Chinese commerce ministry said its anti-subsidy investigation was launched on foot of a complaint from two Chinese associations representing the dairy industry.
The European Commission, which is the executive arm of the EU, said it would follow the Chinese proceedings “very closely” and examine the application that kicked off the inquiry.
“The commission will firmly defend the interests of the EU dairy industry and the Common Agricultural Policy, and intervene as appropriate to ensure the investigation fully complies with relevant WTO [World Trade Organisation] rules,” a spokesman said.
