China's anti-dumping investigations into EU dairy products and related trade tensions

In August 2023, China initiated an anti-subsidy investigation targeting various EU dairy products, including liquid milk, cream, and cheeses, shortly after the EU imposed provisional tariffs on Chinese electric vehicles. The European Commission responded by launching a challenge at the WTO, marking a significant shift in its approach by addressing the issue at the outset of China’s investigation rather than waiting for further retaliatory measures. The Commission expressed confidence that EU dairy subsidies comply with international regulations and do not harm China’s dairy sector. This back-and-forth has the potential to escalate into a broader trade conflict, as both sides engage in ongoing investigations and consultations, with China also exploring anti-dumping measures against EU products like brandy and pork.

EU’s Response to China’s Investigations

The EU’s challenge at the WTO represents a proactive stance against what it perceives as a troubling trend of Chinese trade defense measures that lack adequate justification. The mandatory consultation period at the WTO allows both parties 60 days to negotiate a resolution, but if these talks fail, the EU may request the establishment of an adjudicating panel, which typically takes over a year to reach a conclusion.

Broader Trade Implications

The trade tensions extend beyond dairy products and electric vehicles, as both the EU and China navigate a complex landscape of tariffs and investigations that could impact a wide range of industries. The EU’s protectionist measures, aimed at safeguarding its automotive sector from cheaper Chinese imports, risk igniting a trade war that could adversely affect European companies reliant on exports and critical raw materials sourced from China. As both sides seek to assert their economic interests, the potential for further retaliatory actions looms large, underscoring the fragile nature of current trade relations.