An investigation by China into the impact of subsidised European Union (EU) dairy products on China’s domestic dairy industry has been described as "worrying" by a European farming group.

The Dairy Association of China and the China Dairy Industry Association on behalf of China’s domestic dairy industry has applied to the Ministry of Commerce of China for an investigation into subsidies paid to European dairy farmers.

Copa Cogeca, the group of EU farm organisations has reacted to the announcement of the investigation today (Wednesday, August 21).

In a social media post, the organisation stated: "This further escalation in the EU-China trade relationship and the continuous impact on our sector is very worrying.

"Aside from the trade volumes that can be impacted by this investigation, the most worrying is the challenge to the EU's Common Agriculture Policy.

"This is unacceptable, and we expect a strong reaction from the European Commission and full support to our producers in the next steps of this process.

The basis for the investigation is that certain subsidised EU dairy products impact on China’s domestic dairy industry.

That application claimed that certain EU dairy products received subsidies from the EU and its member governments, and that the EU dairy industry “may benefit from a total of 20 subsidy projects”.

The ministry concluded that the application contains the relevant evidence required for the filing of an anti-subsidy investigation.

“The Ministry of Commerce has decided to initiate an anti-subsidy investigation on imports of relevant dairy products originating from the EU from August 21, 2024,” the ministry said.

The period of subsidy payments under investigation is from April 1, 2023 to March 31, 2024, and the “industry injury” investigation period is a four-year timeframe from January 1, 2020 to March 31, 2024.

The products to be investigated include fresh cheese, processed cheese, blue cheese, milk, and cream, that are used for food consumption directly or after processing.

Among the 20 EU subsidy schemes cited in the investigation is an Irish scheme which is referred to on a translated version of the ministry’s statement as the “Dairy Equipment Subsidy Scheme”.

This likely refers to the Dairy Equipment Scheme under the Targeted Agricultural Modernisation Scheme (TAMS).

Stakeholders within China as, well as governments of other countries, can apply to take part in the investigation, allowing them to make submissions to the Chinese authorities.

The European Commission has said that it takes note of the decision by the government of China to initiate an anti-subsidy investigation on imports of certain dairy products from the EU.

“The commission will…follow the proceeding very closely, in coordination with EU industry and member states. The commission will firmly defend the interests of the EU dairy industry and the Common Agricultural Policy, and intervene as appropriate to ensure that the investigation fully complies with relevant WTO (World Trade Organisation) rules,” the commission said.

The decision of the Chinese authorities is seen as part of trade tensions between that country and the EU.

The European Commission, as part of its own anti-subsidy investigation into the Chinese electric vehicle (EV) industry, announced a draft decision this week to impose countervailing duties on imports of battery (EVs) from China.

That move was part of an EU trade defence investigation, the commission said.

As part of these ongoing disagreements, in June authorities in China said that an anti-dumping investigation would be launched into pork products originating from the EU.

It comes after the European Commission had earlier said that an investigation it carried out “provisionally concluded” that the production of EVs in China benefits from unfair subsidies.

The move by China to launch the anti-dumping investigation into EU pork products was seen as a response to the commission’s investigation.