China - 2009 August 2

China filed its first complaint against the European Union at the World Trade Organization, saying EU anti-dumping duties on Chinese screws and bolts break global commerce rules. The EU decided in January to impose the five-year tariffs on imports of Chinese iron or steel fasteners worth about 575 million euros ($809 million) in 2007. The 27-nation bloc said at the time that the levies would “prevent further distortions and restore fair competition.” China said EU rivals haven’t been sufficiently harmed to justify the trade protection. The EU “failed to comply with the relevant WTO rules in the process starting from initiation, investigation to the final determination,” China’s WTO mission said in an e-mailed statement from Geneva today. “The determinations made are neither impartial nor transparent, which infringes the legitimate commercial interests of over 1,700 Chinese fastener producers.” Fasteners, used for everything from car parts to furniture, are made in the EU by companies such as Italy’s Fontana Luigi SpA that demanded the levies to counter below-cost, or dumped, sales in Europe by Chinese competitors. The duties stemmed from an inquiry opened by the EU in November 2007. China, the world’s second-largest exporter after Germany, accounts for 60 percent of EU imports of the carbon steel fasteners, which also come from Taiwan, the U.S. and Japan. The European Commission, the EU’s trade authority, rejected China’s accusation that the bloc failed to follow WTO rules in probing imports of Chinese fasteners. “As we do in all anti-dumping cases, the applicable EU rules were followed scrupulously, which are in full compliance with the terms of the WTO Anti-Dumping Agreement,” the commission said in a statement from Brussels. “The commission has continuously rejected any notion that the investigation might not have been legally sound or otherwise incompatible with its obligations under the WTO agreement.” Chinese fastener manufacturers increased their share of the EU market to 26 percent in the 12 months through September 2007 from 17 percent in 2004, according to the bloc. EU producers suffered a drop in their combined home-market share to 17 percent from 22 percent in the same period, when consumption expanded by almost a third. The duties range from 26.5 percent to 85 percent, depending on the Chinese company. The Chinese subsidiaries of two EU producers -- Italy’s A. Agrati SpA and Spain’s Celo SA -- were exempted from the levies. Today’s request for consultations is the first step in the WTO case. Under the Geneva-based trade arbiter’s rules, China and the EU must now hold talks for at least two months in an effort to resolve the dispute. If consultations fail, China can ask WTO judges to rule. The EU is already trying to curb imports of Chinese products ranging from frozen strawberries to ironing boards. China faces EU anti-dumping duties on about 40 products -- more than any other nation. The bloc has complained three times against China at the WTO. The EU has carried out more than 140 anti-dumping probes into imports from China since 1979, “becoming one of the WTO members most frequently taking anti-dumping actions against Chinese products,” China’s mission said. “The Chinese side opposes consistently any abuse of anti-dumping actions and the rising tide of trade protectionism.” The commission said anti-dumping measures are about fighting unfair trade, not protectionism. “The decision to impose measures was taken on the basis of clear evidence that unfair dumping of Chinese products has taken place with state distortion of raw-material prices,” the commission said. “This is harming the otherwise competitive EU industry, with potentially dire long term effects.” China has been cited in 60 trade probes by other countries this year, compared with 62 in all of 2008, state-run Xinhua News Agency reported on July 14, citing Liu Danyang, vice director of the Bureau of Fair Trade for Imports and Exports under the Commerce Ministry. Investigations this year involve trade worth $8.27 billion, compared with $6.2 billion in 2008, Xinhua said, adding that Liu attributed the higher figures to rising trade protectionism.