The European Union (EU) took a significant step on Monday by launching a World Trade Organization (WTO) challenge against China’s investigation into anti-subsidy claims regarding imports of European dairy products. This move escalates the trade tensions between Beijing and Brussels.

The Chinese investigation began in August, following the EU's announcement of plans to impose heavy tariffs on Chinese electric vehicles. The EU's executive body stated, "Today, the Commission launched a consultation request at the World Trade Organization, challenging China's initiation of an anti-subsidy investigation against imports of certain dairy products from the EU." It noted that this action was prompted by a pattern of China initiating trade defense measures based on questionable allegations and insufficient evidence.

China's investigation targets a variety of dairy products, including fresh cheese, curd, blue cheese, milk, and cream. The probe focuses on subsidies granted to EU member states under the Common Agricultural Policy, along with national subsidy programs in countries like Ireland, Austria, Belgium, Italy, Croatia, Finland, Romania, and the Czech Republic.

In a statement, the EU emphasized its commitment to protecting the interests of its dairy industry and the Common Agricultural Policy against what it sees as abusive proceedings.

In July, the European Commission revealed plans to impose import duties on Chinese electric vehicles, following an anti-subsidy investigation that indicated these vehicles were unfairly competing with European manufacturers. The EU aims to safeguard its automobile sector, which is a vital part of the economy, providing jobs for approximately 14 million people.

The tariffs are currently provisional and will only become permanent after a member state vote expected before the end of October.

China has responded strongly to the EU’s tariff plans, warning of a potential trade war. Additionally, China has filed an appeal with the WTO regarding the tariffs. The country has also launched investigations into European brandy and pork products, alongside the dairy investigation.

EU Trade Chief Valdis Dombrovskis mentioned that he had "constructive" discussions with China's Commerce Minister Wang Wentao recently, as Beijing seeks to negotiate a deal with Brussels to avoid high tariffs on imported electric vehicles.

The EU's challenge at the WTO marks the first time it has decided to contest an investigation at its initiation stage, representing an initial step in the dispute settlement process. The EU indicated that if discussions do not lead to a satisfactory resolution, it could request the establishment of a WTO panel to adjudicate the matter.

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