The investigation is seen as a retaliatory measure against the EU's proposed anti-subsidy tariffs of up to 36.3 percent this week, which could be imposed on Chinese-made electric vehicles (EVs) from October.
“The funny thing is, I'm both a dairy farmer and an EV driver,” says Duffy, whose herd of 100 cows produces produce that is shipped to China, the Middle East and North Africa.
A longtime Volkswagen fan, he now drives an electric car made by South Korea's Hyundai because he felt the German company was neither innovative nor affordable enough in the emerging sector.
“We should manufacture 100 percent in the EU, but not fall behind technologically so we don't get caught up in a trade war,” he added.
A few hundred kilometres further south, in Kilkenny, Denis Drennan “milks 60 cows a day” when he's not president of the Irish Dairy Manufacturers' Association (ICMSA).
“We are collateral damage. France and Germany are struggling to compete with Chinese EVs and now China is fighting back. Somehow it's people like me who live on farms in the Irish countryside who are getting hit,” Drennan said, calling on the EU to compensate Irish farmers who may be targeted.
In the Belgian capital, official sources said the sequence of events was entirely predictable and that China was expected to respond to EV tariffs with asymmetric actions.
“This is typical of the Chinese government,” said one EU diplomat involved in trade issues.
Chinese state media has widely reported on retaliatory investigations into dairy products, brandy and pork, as well as possible increased tariffs on large-engine vehicles.
02:21
China's EV push in Cuba transforms Havana's roads
China's EV push in Cuba transforms Havana's roads
The Commerce Department proposed raising auto tariffs again on Friday, which would hit Germany, which accounts for 36% of Chinese imports, and Slovakia, which accounts for another 20%, according to research by Rhodium Group.
Farmers and car manufacturers are among the most powerful and active lobbying groups in the EU, and any move to cut their exports is a sure way to mobilise them.
During a visit to Beijing earlier this year, former EU Agriculture Commissioner Janusz Wojciechowski pleaded with his Chinese counterpart not to drag farmers into the debate over EVs.
“It is my intention to do everything possible to avoid a situation where agriculture becomes a victim of the problems of other sectors,” Wojciechowski said, to the dismay of some EU officials who felt this was tantamount to targeting agricultural products.
Inside the European Commission, every Chinese move is seen as pushing a specific pressure point to influence a crucial vote by EU member states in October on whether to impose EV tariffs for five years.
“We knew the situation would only worsen before a final decision could be made,” said a senior EU official, who believed Beijing's efforts were intended to “intimidate” EU member states ahead of the vote.
To block the tariffs, a majority of 15 EU countries representing 65% of the EU's population would need to vote against imposing the tariffs. With each escalation from Beijing, EU experts are counting down which countries will cave in.
In the July referendum, just four countries – Cyprus, Hungary, Malta and Slovakia – voted against the move.
Abstaining, meaning neither for nor against, were Germany, Sweden, Austria, Croatia, Estonia, Finland, Ireland, Luxembourg, Portugal, Romania and Slovenia, while the Czech Republic and Greece did not vote.
Those voting in favor of the tariffs were France, Italy, the Netherlands, Spain, Belgium, Bulgaria, Denmark, Latvia, Lithuania and Poland.
02:03
Chinese electric cars face additional import tariffs of up to 38% from the EU
Chinese electric cars face additional import tariffs of up to 38% from the EU
In its dairy investigation, China named national-level subsidy schemes in Ireland, as well as Austria, Belgium, Croatia, the Czech Republic, Finland, Italy and Romania.
At this stage, it seems unlikely that Beijing will be able to convince enough capitals to reject the tariffs.
In addition to the countries mentioned above, Germany and Sweden, which have close ties to China's auto supply chain and have criticized the EV research, will also have to change their stance.
Still, for a shift in China's favour, Spain, Belgium or Denmark would likely need to do a 180-degree turn in their July votes.
These member states will be closely examining the impact of the pork and brandy investigations, and while for now the Commission is confident it has the figures, pressure is likely to continue to grow.
Beijing has succeeded in starting discussions among countries that were previously bystanders to the trade dispute, even if the tone of the discussions has not always been favorable to China.
“The EU cannot be intimidated by the Communist regime in Beijing on trade policy, because there is much more at stake than trading electric cars for dairy products,” Austrian daily Die Presse said in a forceful editorial this week.
Returning to Kilkenny, ICMSA president Drennan plans to press the Irish government to vote against EV tariffs – an issue sure to be raised by Irish Agriculture Minister Charlie McConalogue when he heads off on a trade mission to China in the coming weeks.
“We should absolutely vote no,” Mr Drennan said. “Farmers are scared, but this is just the beginning. As this goes on, the fears will grow and infant formula could be the next to be hit.”
“If there's going to be a trade war over electric cars, it shouldn't be small farmers like me who are caught up in it.”
