China has announced the start of an investigation into EU-subsidized dairy imports. The news comes just a day after Brussels published its revised draft to introduce higher tariffs on electric car imports from China.

KEY FACTS 

• According to information from the state-run Xinhua news agency, China’s Ministry of Commerce is launching an anti-subsidy investigation against imports of dairy products intended for consumption. It is about cheeses, milk and creams.
• The investigation began following a complaint filed by the China Dairy Association and the China Dairy Industry Association on July 29.
• China will consider 20 subsidy schemes from across the 27-member bloc, specifically those from Austria, Belgium, Croatia, the Czech Republic, Finland, Italy, Ireland and Romania.
• According to Chinese customs data, the EU is the second largest supplier of dairy products to China with at least 36% of the total value of imports in 2023. According to data from the European Commission, in 2023 the EU exported to China dairy products worth 1, 7 billion euros ($1.84 billion).
• In June, the Chinese authorities announced the initiation of another investigation – into the subsidized import of pork and frozen products. The investigation began following a complaint filed by the China Animal Breeding Association. According to data from EU customs, more than half of the pork imported from China in 2023, worth about 6 billion dollars, falls.

KEY STORY 

The European Commission announced the introduction of higher tariffs on electric car imports from China and launched an investigation into the excessive amount of subsidies the state provides to the sector. The EU believes that cheap imports from China are undermining the European market. The tariffs were preliminary and were put in place while the investigation is still ongoing. 

China says the measures are protectionist and has threatened to retaliate with its own tariffs on a number of sectors, including pork, large-engine cars and spirits. Beijing also disputes the measures before the WTO.

According to the EC’s final proposal, the Chinese companies that will be hit the hardest by the higher tariffs are SAIC Motor Corp., Volvo Car parent company AB Geely and BYD. They face additional duties of 36.3%, 19.3% and 17% respectively. These duties will be added to the existing 10% levy on EV imports into the EU.

The final decision will be taken only after the publication of the final regulation by 30 October 2024 at the latest. All potential measures will be in force for a period of 5 years, which may be extended.

WHAT TO WATCH FOR

Rates may still change before they become final. The parties have the right to dispute this proposal within 10 days after its publication. Their comments will be considered and taken into account. Chinese companies condemned the EC’s decision and described the tariffs as “unfair”.