Sunday, 2 August 2009

You screw us, we screw you.

China filed a complaint against the EU in the WTO on Friday. This is the first complaint ever filed by China against any WTO Member other than the US. I first heard of this case when I met with my friends at Crowell & Moring in Brussels last November. The case would be very interesting to watch. Guess some people at the EU Trade Commission will have to cancel their summer holiday.

China in EU trade spat over screw imports

By Daniel Igra in Brussels and Jamil Anderlini in Beijing

Published: July 31 2009 13:57 | Last updated: July 31 2009 18:23

China has sparked a row with the European Union after complaining to the world's trade watchdog that EU anti-dumping duties on Chinese screws and bolts are breaking global commerce rules.

The world's second-largest exporter lodged its first complaint against the EU with the World Trade Organisation on Friday, protesting that EU tariffs of up to 85 per cent were "neither impartial nor transparent" and were damaging business for hundreds of Chinese companies.

The move signals Beijing's willingness to defend its trade-related interests more aggressively through multilateral institutions, as well as its implicit acceptance of the authority of those western-dominated institutions. 

The European Commission said the duties, imposed in January on goods worth some €575m ($812m) a year, complied with WTO rules and served to protect European businesses from unfairly priced Chinese goods.

Under WTO rules, a country imposing anti-dumping duties must prove its domestic industry has been injured by cheap imports from a specific country.

The dispute comes only days after EU trade officials approved pre-emptive penalties on imports of steel pipe from China, viewed by some as a protectionist move intended to mitigate the effects of the economic downturn within the 27-state bloc. 

In a statement from its WTO mission in Geneva, China said the commission had failed to comply with the trade watchdog's rules when it investigated the imports and imposed the measures.

"The determinations made are neither impartial nor transparent, which infringes the legitimate commercial interests of over 1,700 Chinese fastener producers," it said. 

It said the EU had been inconsistent in its application of the rules given that two Chinese subsidiaries of European firms – Italy's Agrati and Celo of Spain – were exempt from the duties. 

However, the European Commission said the measure was fully in line with WTO rules. "Anti-dumping measures are not about protectionism, they are about fighting unfair trade.

"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," Lutz Guellner, trade spokesman, said.

Between last September and June, other WTO members, particularly the US, India and European countries, brought 77 cases worth a total of $9.8bn against China, more than double the number of cases in the same period a year earlier, Chinese state media reported.

Until recently, China has been reluctant to use the WTO to defend its interests. However, it has now decided to engage more directly to ­protect its businesses, according to reported comments from Zhou Xiaoyan, deputy director of the China Bureau of Fair Trade for Imports and Exports.

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