Cheap imports do not pose a threat to the EU, Chinese manufacturers have insisted, as the Commission attempts to deal with an increasing number of requests to introduce punitive duties on Chinese products, allegedly dumped on EU markets at below-cost prices.

The manufacturers were responding to a Commission investigation opened in November, based on allegations from companies based in Italy, Germany and France that Chinese producers are selling steel fasteners or screws, used in sectors such as construction, automobile and agriculture, at prices 30-50% below of their real cost.

The same three countries are also attempting to block a decision by EU Trade Commissioner Peter Mandelson not to recommend anti-dumping duties on Chinese air compressors used to put air in aerosols and tyres, based on the argument that additional duties would harm consumers more than they would help manufacturers.

Over 100 anti-dumping cases and measures are currently being investigated or applied on products originating in China (such as candles and bicycles), highlighting the challenge that the rapid growth of the Asian economy represents for the EU.

In a visit to Beijing on 25-26 February, Mandelson expressed his concern regarding the bloc's swelling trade deficit with China, which reached €159 billion in 2007 – out of a total trade deficit of €185.7 billion. He and his counterpart Chen Deming agreed to set up a new "high-level economic and trade mechanism" to address the growing number of trade irritants between them.

Experts from the Brussels-based law firm Crowell & Moring say the steel fastener case could represent the largest EU-China anti-dumping case so far, with export volumes expected to exceed €660 million in 2008.

However, Chinese producers say that if the Commission does decide to impose duties – which could happen as early as August – they may ask Beijing to take the case to the World Trade Organisation.

They say the probe is unfair because it does not compare 'like with like', arguing that European producers specialise in stronger and more expensive screws. Similar concerns had been voiced in an earlier shoe dispute, where the Commission used Brazil as a reference market for comparing prices with China and determining whether the Asian giant was exporting at below-cost prices.

The disputes again reveal a split across the 27-nation bloc on how to respond to globalisation. While free marketeers such as Britain and the Nordic countries claim the rising number of trade defence probes are protectionist, manufacturing countries such as Italy, France, Spain and Poland insist China is breaking global trade rules, putting their industries at risk and threatening thousands of jobs.

Mandelson has been forced to delay a planned review of the Union's trade defence instruments, which include anti-dumping measures, due to irreconcilable differences between member states.

Published: Wednesday 27 February 2008

Source: www.euractiv.com