BRUSSELS, Feb 27 (Reuters) - European Union trade chief Peter Mandelson was defeated by fellow European commissioners on Wednesday when they overruled him on an anti-dumping case that underscores the rift within the bloc over globalisation.

Mandelson opposed introducing duties on air compressors from China despite finding they were sold at unfairly low prices.

He argued the cost of duties to EU industries which bought compressors outweighed gains for European manufacturers.

But the full European Commission, the EU's executive, backed a plan to introduce the duties for two years.

Mandelson said the compromise represented a defeat too for those who wanted the measures to last the usual five years.

"The EU member states are divided down the middle, so a compromise is the only way forward," he said in a statement.

"But my general position will remain that we should use trade defence measures only where they genuinely help European industry and workers. Otherwise, we will restrict trade without benefit and that is not a sensible course for the EU to take."

The question of balancing the interests of Europe's consumers and its manufacturers is likely to arise in bigger cases this year when the European Commission must decide if Chinese steel is being dumped in the EU.

European engineering firms, big steel users, oppose requests by EU steelmakers for duties on imports from China.

Emma Bonino, trade minister of Italy, home to several manufacturers of air compressors, welcomed the Commission's decision but denied her country was being protectionist.

"We remain convinced that opening markets eventually bring more benefits for everyone ... on condition that markets are really open for everyone and that fair trade is not abused by practices such as dumping," she said.

The 27-nation EU's split on how to respond to the rise of Asia as an export powerhouse has pitted pro-free trade countries like the Nordic states against others such as Italy and France who say China breaks trade rules in ways which cost Europe jobs.

Mandelson was also blocked last year when he tried to scrap anti-dumping duties on Chinese energy-saving lightbulbs but they were eventually extended for a year.

The EU split is mirrored within the European Commission with Industry Commissioner Guenter Verheugen of Germany taking the side of local producers struggling against fierce competition.

The differences meant Mandelson, from Britain, had to put on hold reforms of the bloc's anti-dumping rules in January.

They could have reduced the risk of anti-dumping duties for the growing ranks of EU companies which rely on cheap imports.

Mandelson has said high-profile dumping cases in 2008 will underline the need for a reform of the rules.

The compromise proposal for duties on air compressors will not be put to EU member states.

Wednesday February 27 2008

By William Schomberg

(editing by Andrew Roche)

Source: www.guardian.co.uk