China confirms anti-state-subsidy investigation on EU wine imports

Máire Geoghegan-Quinn, Member of the EC in charge of Research, Innovation and Science, travelled to Germany, where she visited Heliatek, a company specialised in the manufacture of solar panels. The visit of the Commissioner probably reveals that this firm receives EU subsidies. (EC Audiovisual Services).

Yesterday, only a few days after the European Commission decided to impose provisional anti-dumping tariffs on Chinese solar panels imported in the EU, the Mission of the People’s Republic of China to the European Union issued a Press release where the spokesperson of the Mission confirmed that the Ministry of Commerce of China, in response to requests and complaints from Chinese wine producers has launched an anti-dumping and anti-subsidy investigation. In reality China could have chosen any European agricultural product to launch such an investigation, because almost all of them are heavily subsidised through the Common Agricultural Policy (CAP). Of course today state subsidies are paid to producers and not to production, but this doesn’t change the fact that subsidies on products and various aids on investments are paid to the agricultural sector.

Multitargeted action

In this game, however, of anti-dumping tariffs that the Commission lately started with the Chinese solar panels, seem to coexist many obvious and hidden issues. For one thing the Commission is following the American authorities in penalising the Chinese imports. There is more to this affair though. People in Brussels well-informed about trade issues say that this quite predictable ‘retaliation’ from China was clearly expected to fall on agricultural products, which receive state subsidies and various aids under the CAP.

Now given all that, the Commission by introducing provisional tariffs on those Chinese products is protecting in reality the German producers of solar panels who complained, at the expenses of the agricultural producers of the unemployment stricken Eurozone south. In this case the wine producers. Everybody working in the Commission’s services (DG Trade) knew that in the Chinese trade arsenal wine was the next product to be examined and eventually penalised for receiving state subsidies.
It is deplorable then that the Commission tries in this affair to align with the American administration in creating obstacles to Chinese imports and at the same time protect the German producers of solar panels. All that at the expenses of the poverty-stricken southern Eurozone wine producers.

The ‘retaliation’

In detail now, Xiaoyan Jiang, Director Press and Communications in the Mission of the People’s Republic of China to the European Union issued yesterday the following Press release: “Response of the Spokesperson of the Chinese Mission to the EU Concerning Reports of China’s Retaliation Against the EU.

Q: Reports say that China has launched an anti-dumping and anti-subsidy investigation of wine imports from Europe in “retaliation” against EU’s decision to impose anti-dumping tariffs on China’s solar panels. What is your response?

A: China has long been exercising restraint in adopting trade remedy measures despite of clear evidence for the EU dumping and subsidizing certain exports to China. The anti-dumping and anti-subsidy investigation launched by the Ministry of Commerce of China is in response to requests and complaints from Chinese wine producers. The decision complies with the WTO rules and China’s anti-dumping and countervailing regulations. Such regular investigation should not be regarded as retaliation”.

It is obvious that China was ready from many months, probably years, to examine the case of the EU subsidies paid to wine producers. Naturally Beijing would have done nothing, if the Commission hadn’t taken this action. The response of the Mission’s spokesperson is adamant on that: “China has long been exercising restraint in adopting trade remedy measures despite of clear evidence for the EU dumping and subsidizing certain exports to China”.

After this Commission’s action however Beijing seems completely justified to launch this investigation on EU wine imports. On top of that China would have seemed totally helpless, if it hadn’t reacted like that.