China says EU steel probe may dent efforts to help eurozone crisis

27/02/2012 12:00 - 393 Views

China's Ministry of Commerce said it greatly disapproved of an EU countervailing duty investigation for Chinese organic-coated steel exports, citing potential repercussions that may undermine the China-EU joint response to the eurozone financial crisis.

An unnamed official at the ministry's Import and Export Fair Trade Bureau said that the EU probe was based on non-recognition of China's market economy status and a flawed "surrogate country" approach, according to a ministry statement dated Thursday.

Some Chinese exporters said pre-painted sheet accounted for very small part of China’s overall steel exports, so they are more worried that the probe may signal the beginning of further trading barriers this year among developed economies.

The European Commission on Wednesday opened the countervailing duty investigation into organic-coated sheet and coil imports from China. The commerce ministry warned that EU's move signals trade protectionism and is in violation of WTO rules. It follows an EU anti-dumping investigation over the same product launched on December 21.

"The EU refuses to recognize China's global economic standing and has taken prejudiced and unjust replacement measures... and that is in conflict with WTO standards," it said.

China and the EU should adopt a cooperative, open and tolerant attitude so as to be able to deal with the world economic crisis collectively, the statement added.

"What the EU is doing with the anti-subsidy investigation is... protectionism and sends the wrong signal that would jeopardize and strain China-EU trade relations further and thwart current efforts in fighting the crisis."

China exported 5.43 million mt of pre-painted sheet in 2011, up 78% on a year earlier, according to data supplied by China customs.

EU OCS IMPORTS ROSE IN 2011

EU import applications for Chinese OCS product rose 47% in 2011 to 777,000 mt on a year earlier, based on EC data. The increased volume of imports from only 176,000 mt in applications for 2009 during a weak period for the European steel industry as it recovers slowly from the financial crisis has irked Eurofer, the European steel industry group.

Eurofer on January 10 submitted a complaint of widespread industry and state subsidization in China's OCS steel exports, following its push to get the EC to investigate possible dumping of the material.

A major producer in eastern China, targeting mostly European clients, said it was confident it could reply if the anti-dumping and countervailing duty cases were upheld.

However, given the statement by the ministry, market sources said they believed that EU might make some concessions over this issue.

The probe covers imports of flat-rolled pre-painted, varnished and plastic-coated material. However, it is separate from an existing anti-dumping probe into imports of the same material from China.

The complaint alleged that Chinese producers benefit from a number of subsidies provided by the Chinese government, such as exemptions from direct and indirect taxes, preferential loans and interest rate subsidies, and preferential tax rates.

The complaint also alleged that EU producers have suffered from the alleged subsidies, which has reduced sales volumes, prices and market share for European mills.

A preliminary decision on duties is due to be taken within nine months of the investigation being opened, while a final decision is due to be taken within 13 months.

The China Iron and Steel Association retained Brussels-based law firm Salans LLP to represent it in EU anti-dumping proceedings concerning OCS imports.

Traders and European end-users of organic coated sheet (OCS) steel have filed complaints to the European Commission, with one letter from a major user of OCS material seen by Platts.

OCS products are used in the construction sector and in the appliances and mechanical industry.

London (Platts)--24Feb2012/902 am EST/1402 GMT

Source: platts.com