China extends anti-subsidy probe into EU dairy
On Monday, the commerce ministry (MofCom) extended its probe into EU dairy subsidies for six months, citing "the complexity of the case."
- The extension gives officials until late February to assess whether nine EU-wide subsidy schemes and 23 country-specific support measures have unfairly distorted prices for certain dairy products – including cheeses and creams – and if so, to determine related tariffs.
The extension is a mixed blessing for the EU's dairy sector.
- On the one hand, it means these products won't face punitive tariffs in the near term, which is good news both for EU dairy processors and their upstream milk suppliers.
- On the other hand, the longer regulators spend evaluating EU dairy subsidy regimes, the more likely they'll find something that could be used to justify punitive tariffs on a wider swath of products.
Don't forget: This investigation was initiated as a countermeasure to the EU's anti-subsidy probe into Chinese-manufactured new energy vehicles (NEVs).
- It was launched in August 2024, hours after the EU released a key update on the probe.
- It was expanded in November as negotiations to avert EU tariffs on Chinese NEVs stalled.
Get smart: Beijing's logic is simple.
- If Chinese state support for strategic emerging industries can be deemed market-distorting when those industries succeed, then so too can the EU's support for its rural and agricultural sector when dairy processors succeed.
The upshot: The EU won't be able to resolve the dairy probe without offering concessions on its NEV tariffs.