September 2, 2024
Reactions to China's anti-subsidy investigation into EU dairy imports
China has initiated an anti-subsidy investigation into dairy imports from the European Union, a move that comes just one day after the EU announced a revised tariff plan for electric vehicles made in China, Reuters reported.
The investigation targets cheese, milk, and cream intended for human consumption, following the EU's adjustment of proposed punitive duties on Chinese EV imports from 37.6% to 36.3%. Beijing had previously urged the EU to reconsider the tariffs.
Arla Foods, one of the world's largest dairy producers, stated that it is not directly affected by China's anti-subsidy probe. Peder Tuborgh, CEO of Arla Foods, expressed confidence in the EU's ability to manage the situation. Tuborgh remarked, "China is far from self-sufficient in dairy production, and while exports to China remain reasonable, the country is increasingly able to meet its growing consumption through its own development. I view this as a normal market mechanism rather than a specifically protectionist measure."
The European Union Chamber of Commerce in China expressed concern over the growing use of trade defence instruments by governments. The chamber stated, "The chamber will be monitoring the investigation and hopes it will be conducted fairly and transparently. We expect our affected member companies to cooperate fully with the investigation."
FrieslandCampina, a Dutch dairy cooperative with a business selling infant nutrition products and other dairy items in China, acknowledged the announcement of the investigation. A spokesperson for the company said, "We will provide the necessary information related to the investigation if requested, in accordance with laws and regulations."
Tadhg Buckley, director of policy and chief economist at the Irish Farmers' Association, noted that Chinese authorities are primarily focused on products such as cheese, cream, and related processed cheeses. Buckley estimated that these products accounted for approximately EUR 45 million (US$49.7 million) of the EUR 430 million (US$475 million) worth of Irish dairy exports to China last year. He also mentioned that if the investigation expands to include specialised powders used for nutritional purposes, it could have a more significant impact on Ireland's exports.
Ireland's Minister of Agriculture, Food and the Marine, Charlie McConalogue, stated, "I will be engaging with the EU Commission to ensure that it has all of the data necessary, as far as Ireland is concerned, to resolve any issues raised in the proposed investigation."
Jacob Gunter, lead economy analyst at the Mercator Institute for China Studies, provided a broader perspective on the impact of the investigation. Gunter explained that EU dairy exports to China amount to around €1.7 billion, representing less than 1% of total EU exports to China. He noted that while tariffs could significantly affect specific products, the overall impact on EU exports would be limited.
Gunter highlighted that China's dairy production has been expanding for years, reducing the country's reliance on imports. He added, "China is important for butter and cheese exports, but given the size of the country, it is still a minor player. More ‘replaceable' dairy products, such as butter, milk, milk powder, cream, and common types of cheese, are likely to be most affected by tariff hikes."
He concluded that for Europe's high-end and specialised cheeses, the main issue would be whether these products remain cost-competitive in the face of potential tariff increases.
- Reuters