The European Union plans to impose tariffs on Chinese paper to counter below-cost imports that have hurt producers in Europe including Sappi Ltd., according to three people familiar with a trade case that is unprecedented.
The European Commission in Brussels intends to introduce “anti-dumping” duties as high as 39.1 percent on Chinese coated fine paper by Nov. 18 in a case that may also lead to the EU’s first anti-subsidy levies against China, two of the people said on the condition of anonymity because the plan is still confidential. The paper is used for books and brochures.

Europe’s 6 billion-euro ($8.4 billion) market for coated fine paper is the latest focal point of trade tensions after Chinese Premier Wen Jiabao snubbed European pleas last month to let the yuan’s exchange rate rise faster. To bolster European exporters and narrow its trade deficit with China, the EU says the Chinese government should follow up more ambitiously on its June pledge to ease the yuan off a two-year peg to the dollar.

EU taxes on Chinese coated fine paper would follow similar U.S. measures and be the preliminary outcome of a probe opened in February into whether manufacturers in China including Asia Pulp & Paper unfairly undercut European producers. A second inquiry begun in April into alleged trade-distorting Chinese government aid to domestic paper makers may result in the EU’s first anti-subsidy duties against the country, a step that would open a new front in Europe’s battle to slow imports from China.

Anti-Dumping Duties

Europe already imposes anti-dumping duties on Chinese goods ranging from textiles and chemicals to shoes and bicycles. China faces such EU measures on about 50 products, more than any other nation.

The call for European anti-dumping and anti-subsidy duties against China comes from a group that includes South Africa- based Sappi, which makes coated fine paper in EU countries including Germany and the Netherlands. Germany’s Papierfabrik Scheufelen GmbH, Spain’s Lecta SA and Italy’s Burgo Group SpA are also in the alliance seeking trade measures.

The group says Chinese competitors increased their combined share of the EU market for coated fine paper to almost 5 percent in 2009 from less than 1 percent in 2005. The anti-dumping duties to be introduced by the commission will amount to 39.1 percent against all producers in China except Asia Pulp & Paper, which faces a 19.7 percent levy, said the two people.

Two other producers of coated fine paper in the EU are Finland’s Stora Enso Oyj and UPM-Kymmene Oyj, both of which declined to give their views on the trade cases when contacted by Bloomberg News today. Stora Enso makes coated fine paper in China as well, while UPM-Kymmene doesn’t, the companies said.
The commission, the EU’s trade authority, has nine months from the start of a trade investigation to decide on provisional measures. The EU’s 27 governments, acting on a commission proposal, have 13 months from the beginning of a probe to impose “definitive” five-year anti-subsidy duties and 15 months to apply definitive anti-dumping measures.