San Francisco Frontiers - EU condemns China dairy duties as 'unjustified'

China's announcement on Monday was the latest in a trade spat with the EU covering a series of goods from food to electric vehicles.

The temporary "duty deposits", which range from 21.9 percent to 42.7 percent, come into effect on Tuesday.

They hit an array of items including fresh and processed cheese, curd, blue cheese and some milk and cream, the commerce ministry in Beijing said in a statement.

Chinese officials launched an anti-subsidy probe in August 2024 after receiving a request from the Dairy Association of China.

The probe will conclude in February and China could then modify the duties.

China's commerce ministry said on Monday that preliminary findings showed a link between EU subsidies and "substantial damage" to its domestic dairy industry.

European officials contested such conclusions.

"Our assessment is that the investigation is based on questionable allegations and insufficient evidence, and that the measures are therefore unjustified and unwarranted," said European Commission trade spokesman Olof Gill.

He said the commission -- the EU's executive arm -- had already taken action at the World Trade Organization after China initiated its dairy investigation and would assess the latest steps against WTO rules.

"We are doing everything it takes to defend EU farmers and exporters, as well as the Common Agricultural Policy, against China's unfair use of trade defence instruments," said Gill.

The spokesman called the provisional duties "a very negative development" in EU-China relations.

French dairy association FNIL, which includes major groups Danone and Lactalis, also criticised the duties.

"It's a shock, a blow," FNIL head Francois-Xavier Huard said.

He said the decision was in particular a blow for French food company Savencia, a major exporter of cheese to China that had cooperated extensively with Chinese authorities.

EU countries exported more than 1.6 billion euros ($1.9 billion) of dairy products to China last year, according to European Commission data, down from a record of just over two billion euros in 2022.

The levies on EU dairy items come a week after Beijing said it would impose duties on EU pork imports for five years to counter alleged dumping of products on the Chinese market.

Those duties kicked in on December 17 and range from 4.9 percent to 19.8 percent -- down from temporary levies of 15.6 to 62.4 percent that had been in place since September.

- Escalating spat -

The two economic powerhouses have been locked in a trade struggle.

The current spat erupted in 2024 when the EU began moving towards imposing hefty tariffs on Chinese electric vehicles, arguing that Beijing's subsidies were unfairly undercutting European competitors.

Beijing denied that claim and announced what were widely seen as retaliatory probes into imported European pork, brandy and dairy products.

After the EU went ahead with the tariffs on Chinese electric vehicles, Beijing forced EU brandy manufacturers to raise prices or face anti-dumping taxes of up to 34.9 percent.

Steel is another source of tensions, with the EU angered by Beijing subsidising its steelmakers who, it says, have been flooding the market with large quantities at knock-down prices.

Brussels unveiled proposals to hike tariffs on foreign steel in October.

Two days later, China, the world's top producer of rare earths, announced new controls on exports of the elements used to make magnets crucial to the auto, electronics and defence industries.

The trade dispute is also fuelled by what many European countries view as an unbalanced economic relationship with China.

The EU ran a trade deficit of more than $350 billion with China in 2024.

French President Emmanuel Macron said this month that Europe would consider adopting strong measures against China, including tariffs, if the trade imbalance was not addressed.

Alongside trade frictions, China and the EU are at odds on issues such as Russia's 2022 invasion of Ukraine.

The EU has urged China to exert pressure on Moscow to end the war, seemingly to no avail.

burs-rl/gil

D.Brown--SFF