• Beijing’s moves to hit farm goods seen as attempt to flip formerly neutral bloc members ahead of crunch vote on electric vehicle tariffs

On his family farm half an hour south of the Irish border, Thomas Duffy could have been forgiven for thinking he was safe from the expanding tentacles of China’s brewing trade war with Europe.

But this week, he and many of Ireland’s 17,000 other dairy farmers were stunned by news that China is investigating subsidies into cheese, milk and cream from across the European Union.

Ireland exported almost US$50 million of the products named in the announcement to China last year. Most of it is shipped via co-operatives that take produce from dairy farms like Duffy’s, on the outskirts of Virginia, a picturesque town that hugs the shore of Lough Ramor in County Cavan.

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The probe is seen as retaliation for the EU’s anti-subsidy duties of up to 36.3 per cent that were proposed this week, and which could be slapped on Chinese-made electric vehicles (EVs) from October.

“It’s funny, because I’m a dairy farmer and an EV driver,” said Duffy, whose 100-strong herd of cattle provides produce that is shipped to China, as well as the Middle East and North Africa.

Having been a Volkswagen loyalist for years, he now drives an electric Korean Hyundai because he felt the German company was neither innovative nor affordable in the emergent space.

“We should 100 per cent be making things in the EU, but we should not be falling behind on technology … then we wouldn’t be getting into these trade wars,” he added.

A couple of hundred kilometres further south in Kilkenny, Denis Drennan “milks 60 cows a day” when he is not donning his hat as president of the Irish Creamery Milk Suppliers Association (ICMSA).

“We are collateral damage. France and Germany are struggling to compete with Chinese EVs and now China hits back. Somehow it’s the likes of myself, on a rural farm in the middle of nowhere in Ireland, that gets hit,” said Drennan, who called for Brussels to reimburse any Irish farmers who might get caught in the cross hairs.

In the Belgian capital, official sources say the sequence of events was entirely predictable – it was expected that China would respond to the EV duties with asymmetric actions.

“It’s straight from the Chinese government playbook,” said one EU diplomat who works on trade matters.

Retaliatory probes into dairy, brandy and pork were well-telegraphed in the Chinese state media, as was a potential tariff increase on large-engine cars.

On Friday, the commerce ministry floated the auto duty increase again, which would hit Germany – providing 36 per cent of China’s imports – and Slovakia – a further 20 per cent, according to Rhodium Group research.

Farmers and car makers are among the bloc’s most powerful and active lobby groups, and a move to curtail their exports is a sure-fire way to get them mobilised.

When he went to Beijing earlier this year, former EU agriculture commissioner Janusz Wojciechowski begged Chinese counterparts not to drag farmers into the row over EVs.

“My intention is to do everything which is possible to avoid the situation that agriculture is a victim of the problems in other sectors,” said Wojciechowski, to the dismay of some EU officials who felt he may as well have been carrying a target with farm goods in the middle.

Inside the European Commission, each move by China is seen to push particular pressure points in an effort to influence a crunch vote of EU members in October that will determine whether the EV tariffs are adopted for five years.

“We knew that it would only get worse before the final decision,” said a senior EU official, who thought Beijing’s efforts were designed to “scare” bloc members ahead of the vote.

To block the tariffs, a majority of 15 EU members representing 65 per cent of the European Union’s population would have to vote against their adoption. With each escalatory move from Beijing, EU wonks are crunching the numbers to see who might cave.

In an indicative vote in July, just four members voted against – Cyprus, Hungary, Malta and Slovakia.

Abstaining – which counts as neither a vote for nor against – were Germany, Sweden, Austria, Croatia, Estonia, Finland, Ireland, Luxembourg, Portugal, Romania and Slovenia, while the Czech Republic and Greece cast no vote at all.

Voting in favour of the tariffs were France, Italy, the Netherlands, Spain, Belgium, Bulgaria, Denmark, Latvia, Lithuania and Poland.

In its dairy probe, China has named national-level subsidy programmes in Ireland, as well as Austria, Belgium, Croatia, the Czech Republic, Finland, Italy and Romania.

At this stage, it appears unlikely that Beijing will convince enough capitals to reject the duties.

Each of the countries named, plus Germany and Sweden – which are highly connected to the Chinese auto supply chain and have both criticised the EV probe – would have to flip.

These member states will be studying the impact of pork and brandy probes closely. For now, the commission is confident it has the numbers, but the pressure will continue to mount.

Beijing has succeeded in kicking off a debate in countries that were erstwhile bystanders to the trade dispute – even if the tone may not always be to its liking.

“The EU must not allow itself to be blackmailed by the Communist regime in Beijing in terms of trade policy. Because there is more at stake than simply exchanging electric cars for dairy products,” stated a forceful editorial in Austrian daily newspaper Die Presse this week.

Back in Kilkenny, ICMSA president Drennan will be leaning on the Irish government to vote against EV duties. The issue is sure to be raised when Irish agriculture minister Charlie McConalogue takes a trade mission to China in the coming weeks.

“We absolutely should be voting against it,” Drennan said. “Farmers are afraid, and this is only the start of it – it will notch up as things go along and infant formula could be hit next.”

“If there is going to be a trade war over electric cars, then it’s crazy that small farmers like me are collateral damage.”

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