eu escalates trade row at wto over chinese dairy investigation

The European Commission approached the World Trade Organization (WTO) on Monday regarding China’s actions on EU dairy subsidies. According to the EC, the subsidies comply with international rules. Beijing initiated an investigation the day after the EC announced new tariffs on Chinese electric cars.

For the first time, the European Union has approached the WTO at such an early stage of the proceedings. China initiated an investigation into European dairy subsidies on 21 August, just a month ago. On 20 August, the EC announced planned new tariffs on subsidised Chinese electric vehicles.

Brussels now wants to challenge the proceedings initiated by China against European goods.

The EU's action is driven by China's tendency to quickly introduce trade protection measures based on dubious allegations and insufficient evidence, the EC's statement reads.

In its investigation, Beijing is examining subsidies from the Common Agricultural Policy on milk, cream, and cheese from the EU. The investigation concerns not only EU subsidies but also some national and regional programmes. "The Commission is confident that these subsidy programmes fully comply with international regulations and do not harm the Chinese dairy industry," the EC emphasised.

Brussels requested consultations on Monday, which marks the first step in the dispute resolution proceedings before the WTO. Next, the EU may ask the WTO to establish a panel to decide on this investigation.

In recent months, China has also initiated an anti-dumping investigation related to the import of European pork and French cognac.

The European Commission seeks to impose tariffs of up to 35% on Chinese-manufactured electric vehicles. These will be paid along with the existing 10% import tariff. The decision is to be approved by member states in a vote in the coming weeks. China is still negotiating with the EU.