The row is now set to dominate and potentially overshadow an Irish food industry trade mission to China next month, which is being led by Agriculture Minister Charlie McConalogue and will include officials from Bord Bia.
It is part of an effort to expand markets for Irish food in Asia.
‘If the EU is going to embark on a trade dispute, ICMSA will demand the EU compensate farmers’
The Irish dairy sector has been dragged into the centre of the developing trade dispute between the EU and China.
Chinese authorities announced yesterday that they have have opened an anti-subsidy investigation into imported dairy products from the EU.
The move stops well short of blocking imports – but it is a shot across the bows, with an implied threat that EU access to Chinese markets depends on trade being able to flow the other way.
The EV tariff could divide member states. Photo: Getty
China is thought to be responding to EU moves that would curb the country’s electric car sales.
The new EU electric vehicle tariff will add an extra 10pc to the price of Chinese-made Tesla cars, put an extra 17pc on China’s BYD models, and add 19.3pc to the price of Geely cars.
The levy will potentially benefit car manufacturers in Germany, France and industrialised member states.
The Chinese reaction would hit agricultural producers in Ireland, Austria, Belgium, Croatia, the Czech Republic, Finland, Italy and Romania, and could create a wedge line between EU members. Ireland is by far the biggest exporter of dairy to China of that group.
Dairy Industry Ireland, the Ibec association representing the industry, expressed disappointment at the developing situation and called on the EU and the Irish Government to intervene, but said the scope of the Chinese probe is limited.
However, the ICMSA farm representative body said its members had been caught up in a dispute that is not of their making – and said the EU would have to compensate them if they lose out as a result of a tariff on EVs.
ICMSA president Denis Drennan said that “yet again” Irish dairy products might end up as “collateral damage”.
Any kind of negative impact on exports worth more than €450m would be a “savage blow”, he warned.
“We have to be blunt here: we need this like a proverbial hole in the head,” said the ICMSA president.
“If the EU is going to embark on a trade dispute that wipes out our milk powder and butter trade with China, then ICMSA will be demanding that the EU compensate the farmers – who you can be absolutely sure will be the ones who end up paying the cost of a trade dispute that we had nothing to do with, and the resolution of which is completely outside our control.”
Chinese EVs are cheaper than EU cars. Photo: Getty
The new investigation announced by China’s commerce ministry will focus on various types of cheeses, milks and creams intended for human consumption.
Irish cheese, butter and cream products are typically exported for use in the retail and food service channels, including the Chinese restaurant, bakery and tea chain.
It is a smaller but faster growing segment of the market, relative to the historically more important baby-food segment.
Irish dairy processors have also been forming partnerships with local Chinese manufacturers, supplying base ingredients for their own brands.
China said the probe was prompted by a complaint submitted by the Dairy Association of China and the China Dairy Industry Association on July 29, on behalf of the domestic industry.
