China will impose tariffs on certain dairy products imported from the EU ranging from 7.4% to 11.7%, starting on February 13, for a period of five years, China's Ministry of Commerce (MOFCOM) announced, as it released the final ruling of its anti-subsidy investigation. The countervailing investigation into EU dairy imports was launched on August 21, 2024, following applications from the Dairy Association of China and the China Dairy Industry Association. The ruling report shows that the investigated dairy products imported from the EU received subsidies, caused material injury to the relevant domestic industry in China, and that a causal link exists between the subsidies and the injury, according to a MOFTEC Spokesperson.
This move aims to better safeguard the interests of the domestic industry while ensuring a fair, lawful, healthy, and level playing field in the market, analysts said. “Unfair trade practices from the EU have affected the Chinese dairy sector,” Li Yong, Executive Council Member of the China Society for WTO Studies, told the Global Times, noting that implementing the corresponding anti-subsidy measures is both appropriate and timely, and in line with the WTO rules. Verifiable facts show that the EU's Common Agricultural Policy (CAP) provides massive support to the dairy sector, accounting for a significant share of agricultural factor income in the EU. According to official data from the EU, dairy sector subsidies account for more than 20% of farm income in some low-subsidy countries and even reached over 70% to 90% in certain high-subsidy countries. Taking all subsidies into account, total EU support reached 33% of agricultural income on average in the EU.
“The CAP's massive subsidies to the dairy industry have caused shocks and damage to domestic industries,” Jian Junbo, Director of the Center for China-Europe Relations at Fudan University's Institute of International Studies, told the Global Times, noting that these subsidies have created an unfair competitive advantage, not only distorting production incentives and causing output to exceed internal EU demand, but also pushing the surplus into international markets, lowering prices and increasing pressure on importing countries, including China. The final tariffs are much lower than the previous temporary rates ranging from 21.9% to 42.7%. “The relatively lower subsidy rates reflect that the investigation authority, in its ruling process, fully considered the concerns of all parties, including EU companies, ensuring that the conclusion is objective and fair,” said Jian, as reported by the Global Times.
