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London/Hong Kong CNN —
China is investigating whether European Union dairy producers are receiving unfair government subsidies, the latest attack in an escalating trade dispute.
China's Commerce Ministry said on Wednesday that domestic dairy farmers had requested an investigation into 20 different subsidy schemes that could benefit the EU dairy industry. The schemes range from financial assistance for farm equipment and subsidies for young farmers to environmental and administrative subsidies.
The Commerce Department added in a statement that an initial review of the evidence found sufficient grounds for an anti-subsidy investigation, which it said could take up to 18 months.
According to data from the European Commission, the EU is one of the world's largest exporters of dairy products, with China being the second-largest destination for EU skimmed milk and whole milk powder exports. The UK and the US are the top two destinations for EU butter and cheese exports, with China in third and eighth place respectively.
The announcement came a day after the EU confirmed it would impose additional tariffs on most electric vehicles imported from China.
Beijing and Brussels have been locked in a trade battle for much of the past year, since the EU launched an investigation in September into what it called “unfair” state aid to Chinese electric vehicle makers. The EU is also investigating Chinese support for wind turbine companies.
Meanwhile, China has launched anti-dumping investigations into EU brandy and pork products.
European Commission spokesman Olof Gill said in a statement on Wednesday that the EU's enforcement agency would follow Beijing's investigation “very closely” and make “appropriate interventions” to ensure that the probe complies with World Trade Organization rules.
“The Commission will resolutely defend the interests of the EU dairy industry and the Common Agricultural Policy,” he added, referring to the EU's official farm support program.
