"this is not the first time we have been held hostage"
2024-09-26
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deutsche presse-agentur reported on the 24th that the european commission submitted a complaint to the world trade organization (wto) this week, questioning china's anti-subsidy investigation into eu dairy products after europe announced an additional tax on chinese electric vehicles. a recent analysis report by rabobank said that the chinese government's investigation into eu dairy subsidies affects eu exports worth more than us$570 million. the intensification of trade tensions between the eu and china may help dairy exporters in australia, new zealand, the uk and the us to profit in the chinese market.
the eu defends itself
according to deutsche presse-agentur, the eu is defending itselfthe european commission said that china launched an investigation into parts of the eu dairy industry on august 21, 2024, targeting subsidies under the eu common agricultural policy and certain national and regional projects. the european commission said that these subsidies are fully in line with international rules and will not harm the chinese dairy industry.
european dairy industry practitioners are paying close attention to china's anti-subsidy investigation. the picture shows dairy farmers at a french agricultural exhibition. (visual china)
according to eu data,in 2023, the eu exported dairy products worth 1.7 billion euros to china, and china accounted for nearly 15% of the eu's dairy exports.in 2022, exports to china in this category reached nearly 2.1 billion euros.
china's ministry of commerce said on the 23rd,china's anti-subsidy investigation against eu dairy products was initiated in accordance with chinese law and in response to applications from the domestic industry.china has the responsibility to safeguard the legitimate demands and lawful rights and interests of domestic industries.
"this move is considered to mark a renewed escalation of the sino-eu trade dispute." france international radio said on the 24th that the european commission announced on august 20 that it plans to impose a five-year additional tax on chinese electric vehicles. china subsequently launched an anti-dumping investigation on pork, dairy products and brandy from the eu.
“beijing is mainly targeting products that would harm certain eu countries that voted in favor of tariffs on chinese electric vehicles,” said agatha kratz, head of agricultural products at the rhodium group, which studies china-eu relations.
already lost the russian market
alexander anton, secretary general of the european dairy association, said that the european dairy industry feels that it has become a victim of the trade dispute:“once again, the european dairy industry is being impacted by trade tensions that have nothing to do with milk and dairy products.that’s why we really insisted that the committee help us with this. this is not the first time we have been held hostage.”
a recent analysis by rabobank states:china is an important export destination for some european dairy companies.some products have been targeted for investigation by china, such as some liquid creams and cheeses.in 2023, the total trade volume of these target products with china was us$572.5 million, of which france accounted for 37%.however, the investigation does not yet include categories that china imports in large quantities, including whole milk powder and butter. still, some dairy industry players are concerned that china may expand the scope of target products for the investigation.
germany's handelsblatt said on the 24th:china does have good reasons to support some investigations into europe.the common agricultural budget is a major item in the eu budget, and for many years about one-third of the total budget has been used to support the agricultural sector.regarding the trade investigation launched by europe against chinese imports on the grounds of "government subsidies", china can also say that europe is using billions of dollars to support its domestic industry when it comes to european dairy products.
russia's sputnik news quoted russian global market expert mikhail belyaev's analysis on the 24th that the chinese market is very important to europeans.in the worst case scenario, many european countries will lose the chinese dairy market.
according to the russian newspaper izvestia, russian president vladimir putin has extended the food embargo on some countries until 2026. in 2014, russia imposed an import ban on agricultural products from countries that supported anti-russian sanctions, prohibiting the import of meat products, fish and seafood, vegetables, fruits and dairy products from these countries. as a result, the eu lost the russian dairy market.
who will replace it?
song liang, an independent dairy analyst, said in an interview with the global times on the 25th that in the future chinese dairy market, supporting imported products is a major direction."in terms of europe, judging from the import situation in the past two years, our biggest demand is infant formula milk powder. currently, europe has concentrated hundreds of milk powder brands in china. in addition, there are high value-added and high-quality cheese, butter, condensed milk, concentrated milk, etc.”
song liang said that from the perspective of trade balance,china's imports of high-quality agricultural and sideline products, especially high-quality raw materials for agricultural and sideline products, will continue to increase.for example, the dairy exports of australia and new zealand to china are mainly concentrated in the supply of raw materials. new zealand is china's largest source of whole milk powder and raw cheese imports.
a report by rabobank shows that in recent years,chinese dairy companies are keen to expand the market for high value-added dairy products and increase investment in improving the supply chain, including setting up production facilities overseas, in order to obtain higher quality and more price-competitive milk sources.
in the first half of this year, dairy companies in australia and new zealand have received many new orders or cooperation projects from china, and european dairy companies may face greater competition.
if china imposes additional tariffs on european dairy products,dairy products from australia, new zealand and the uk are likely to replace eu products in the chinese market.
in 2023, china's total cream imports from new zealand were about 147,500 tons, while the total cream imports from the eu were close to 97,000 tons. similarly, china imported about 20,000 tons and about 100,000 tons of cheese from australia and new zealand, respectively, while the cheese imports from the eu were about 32,000 tons. if there is a gap in imports from the eu, american products can also fill it.
source: global times
