EU Challenges 'Retaliatory' Chinese CVD Investigation on EU Dairy Products at WTO

The EU officially filed dispute consultation requests at the World Trade Organization on Sept. 25 regarding China's decision to open an investigation on certain dairy products from the EU. The European Commission announced the move earlier this week, saying the probe marks a pattern of China opening trade defense measures "based on questionable allegations and insufficient evidence" (see 2409230014).

In its request, the EU said it's concerned that the inquiry was opened in retaliation for the bloc's countervailing duties imposed on Chinese electric vehicles. "A link between this action and EU's investigation on battery electric vehicles appears evident," the bloc said.

China opened its investigation last month to potentially countervail alleged EU subsidies issued through the Common Agricultural Policy (see 2408210025).

The EU made seven separate claims against China's decision to open the investigation, all of which involved alleged violations of the Agreement on Subsidies and Countervailing Measures. The bloc said China violated the agreement because its decision to start the proceeding didn't include "sufficient evidence of the existence of a countervailable subsidy." Chinese authorities assumed "the pass-through of the benefit conferred upon dairy farmers to the processors and exporters of the allegedly subsidized exports," the brief said.

The EU added that China assumed that "all financial contributions to dairy farmers are specific," though this "assumption is incorrect," given that contributions under the Common Agricultural Policy aren't explicitly limited to certain enterprises and are available to all farmers. The contributions "operate on the basis of objective criteria or conditions that are neutral, automatic and strictly adhered to," the EU said.

The application for the CVD investigation in China is also insufficient because it doesn't include any data on the "volume and value of the domestic production of the like product by the applicants and this does not appear to be justified by confidentiality reasons," the EU alleged. The request for consultations also alleged a failure to prove a "causal link between the subsidized imports and the alleged injury" and an unjustified treatment of information from the Chinese industry as confidential.