China has announced provisional anti-subsidy duties on dairy products imported from the European Union, citing damage to its domestic dairy sector. Effective December 23, the duties will range from 21.9% to 42.7%. This decision follows a year-long investigation that found EU dairy products received subsidies that negatively impacted Chinese producers. The new measures add tension to the already strained trade relations between China and the EU, especially after the European Commission launched an anti-subsidy probe into Chinese electric vehicles earlier this year.
Details of the Anti-Subsidy Duties
The Chinese commerce ministry has set the anti-subsidy duties according to the findings of its investigation into EU dairy imports. The lowest duty rate of 21.9% will apply to Italy’s Sterilgarda Alimenti SpA, while FrieslandCampina Belgium NV and FrieslandCampina Nederland BV will face the highest rate of 42.7%. Additionally, 12 French companies will incur duties of 29.7%, and around 50 other firms from Italy, France, and Germany will be subject to a rate of 28.6%. The ministry’s announcement signals a significant impact on EU dairy exporters, as China is a vital market for these products.
Impact on EU Dairy Exports
China is the second-largest market for European dairy exporters after New Zealand. Data indicates that the EU ranks as China’s second-largest supplier of dairy products. In 2023, China was the second-largest destination for skimmed milk powder exports from the EU and the fourth-largest market for butter and whole milk powder. The implementation of these duties could have far-reaching consequences for the EU’s dairy industry, potentially leading to diminished exports and financial setbacks for affected companies.
Context of Trade Relations
These duties’ announcement comes amid intensified tensions in trade relations between China and the EU. Earlier in 2023, the European Commission initiated an anti-subsidy investigation into electric vehicles made in China, leading Beijing to start its own investigations into various EU imports, including dairy products. This reciprocal action has heightened concerns about increasing trade frictions between the two economic powers as they navigate their respective trade policies.
China’s Stance on Trade Remedies
In light of recent developments, a representative from the commerce ministry’s trade remedy department highlighted that China has been cautious in applying trade remedy measures. The official pointed out that no new investigations targeting the EU have been launched this year, with only three anti-dumping cases leading to final rulings. The ministry reiterated its commitment to resolving trade frictions through dialogue and consultation, aiming to uphold cooperative economic and trade relations with the EU.
Digihunt is not a financial advisor and this is not investment advice.