By Joe Cash and Mei Mei Chu
BEIJING (Reuters) – A day after the Union published a revised tariff plan for electric vehicles (EVs) made in China, China has launched an investigation into subsidies on cheese, milk and cream imports from the EU, in addition to its investigations into brandy and pork from the EU.
Here are the main problems:
WHY IS CHINA SOUR?
Beijing is already investigating whether EU imports of brandy and pork are being sold below market price. The third investigation, into whether EU dairy products are being subsidised, broadens the circle of member states being targeted. They are examining a plan to impose tariffs of up to 36.3 per cent on Chinese electric vehicles before a vote on their implementation in October.
In a non-binding vote on the proposed tariffs on electric vehicles in July, France, Italy and Spain supported them, while Germany, Finland and Sweden abstained, government sources said.
WHO IS MOST AT RISK?
According to the latest investigation into the dairy sector, France, Spain, the Netherlands and Denmark – Europe’s largest brandy and pork exporters to China – are now the EU countries most exposed to Chinese pressure to reduce taxes on electric cars.
France is likely to be the worst affected, exporting dairy products worth $211 million last year, according to Chinese customs data.
Overall, Beijing’s trade investigations could hit France, Denmark, the Netherlands and Spain hardest. These countries are also Europe’s largest pork exporters and 99 percent of the brandy imported into China last year came from France.
Italian, Danish, Dutch and Spanish dairy farmers are also expected to be affected because they have sold goods worth $65 million, $55 million, $52 million and $49 million to China, which Beijing says it intends to specifically investigate.
HOW COULD THE SITUATION DEVELOP?
The Chinese state-run tabloid Global Times was the first to report on the investigation in Beijing and also hinted in June that an anti-dumping investigation against European large-engine gasoline cars might be imminent.
Such an investigation has not yet taken place, but it would hit Germany hardest because the country was the largest exporter of vehicles with engines of 2.5 liters or more to China last year, with shipments worth $1.2 billion.
(Reporting by Joe Cash and Mei Mei Chu; Editing by Christopher Cushing)
