EU Challenges China's Dairy Investigation at WTO Amid Rising Trade Tensions

China's investigation, initiated on August 21, targets various EU dairy products, including liquid milk, cream, and cheeses

The European Commission launched a formal challenge at the World Trade Organization (WTO) on Monday against China's anti-subsidy investigation into EU dairy products. This move follows the European Union's recent imposition of tariffs on Chinese electric vehicles, escalating tensions between the two economic giants. Notably, this is the first time the EU has acted at the outset of an investigation, rather than waiting for potential trade measures to be imposed. China's investigation, initiated on August 21, targets various EU dairy products, including liquid milk, cream, and cheeses. The European Commission asserts that EU dairy subsidy programs fully comply with international trade regulations and do not harm China's dairy industry.

WTO proceedings begin with a mandatory 60-day consultation period, during which both parties attempt to reach a resolution. Should these talks fail, the Commission plans to request the establishment of a WTO adjudicating panel, a process that typically takes over a year to deliver a conclusion. The EU's challenge marks a significant development in the ongoing trade tensions with China, which also includes Chinese anti-dumping investigations into EU brandy and pork. In addition, the EU is expected to vote soon on finalizing tariffs on Chinese electric vehicles that could remain in place for up to five years.