EU Seeks to Shield Agriculture From Trade Tensions with China

The European Union is engaged in diplomatic efforts with China to prevent its agricultural sector from becoming entangled in escalating trade disputes. The EU emphasizes the “strategic” importance of agriculture and seeks to insulate it from potential fallout stemming from tensions in areas like renewable energy and electric vehicles.

EU Agriculture Commissioner Janusz Wojciechowski, during a recent trip to Beijing, stressed to Chinese officials the need to treat agriculture as a specially protected sector vital to global food security. This comes as Brussels probes Chinese suppliers over alleged violations of the bloc’s new foreign subsidies regulation, designed to address competition distortions.

Tensions between the EU and China, its second-largest trading partner, have intensified amid EU accusations that Beijing fosters industrial overcapacity to bolster its economy, leading to potential product dumping on European markets. Brussels also criticizes a ballooning goods trade surplus in China’s favor.

Agriculture, however, represents a bright spot in EU-China trade. The EU maintains a surplus in agrifood trade with China, with exports totaling €14.6bn in 2023, despite an 8% decline from the previous year.

The bloc has launched several anti-subsidy investigations targeting Chinese clean energy and infrastructure companies in recent months. Ursula von der Leyen, European Commission president, announced a probe into Chinese electric vehicles, potentially leading to tariffs.

China’s own investigation into the French cognac market after the EV probe raised concerns that the EU’s agricultural sector could face retaliatory measures. “Our agrifood exports to China are important… it is problematic if our sector pays the price for disputes concerning other sectors,” said an EU agricultural lobby group spokesperson.

The spokesperson cited Australia’s experience, where Chinese sanctions targeting agricultural exports followed political rifts. However, there are signs of China softening its stance, with a recent lifting of a five-year ban on Belgian pork imports.