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China launches dispute with EU over screw imports

China launched its first trade dispute against the European Union, complaining that anti-dumping duties imposed on imported Chinese screws and bolts are discriminatory and protectionist.

But the European Commission said its duties of up to 85% were fully compliant with World Trade Organisation rules and were imposed on unfairly priced Chinese goods that were hurting European businesses.

The dispute is the first launched by China at the global trade watchdog against the European Union, which Beijing named as one of the most frequent users of anti-dumping measures against China. China has previously launched four WTO disputes against the United States.

Policy-makers and economists are closely tracking the use of anti-dumping measures -- duties imposed on imports that are sold for less than they cost at home -- to see if they are being abused for protectionist purposes in the economic crisis.

Under WTO rules, a country imposing anti-dumping duties must prove its domestic industry was injured by the cheap imports.

The import duties were imposed in January and target as many as 200 Chinese companies selling components widely used for cars, white goods and machinery in the EU worth some €575 million ($812 million) a year.

China believes they are discriminatory, as they exempt two Chinese subsidiaries of European firms -- Italy's Agrati and Celo of Spain.

Brussels failed to comply with WTO rules when it investigated the imports and imposed the measures, said a statement from the Chinese WTO mission.

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

China said the EU had carried out over 140 anti-dumping investigations of Chinese imports in the last 30 years.

“The Chinese side opposes consistently any abuse of anti-dumping actions and rising of trade protectionism,” said the world's second biggest exporter and third biggest importer.

But the European Commission said the measure was completely 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,” trade spokesman Lutz Guellner said.

“This is harming the otherwise competitive EU industry, with potentially dire long-term effects,” he said in a statement.

China joined the WTO in 2001. Its booming trade has made it a frequent target of trade measures by other countries, and Beijing is also increasingly making use of WTO procedures to advance its own interests.

“I think it is a very important step for China to adapt itself to professionalism with WTO rules,” a trade official at the Ministry of Commerce said in Beijing. “As a new WTO member with only seven years, China needs to learn and this is a learning step.”

China is closely watching a couple of other trade issues at the EU, he noted.

These are a commission decision likely in September on whether to extend anti-dumping duties on imports of leather shoes from China and Vietnam, which most EU states want scrapped, and a decision on whether to end duties of 15-25% on Chinese steel pipes and iron tubes.

The mission statement said China was seeking consultations with the EU under the WTO's disputes procedure, the first stage in a trade dispute, usually lasting 60 days. If the consultations fail the matter moves to WTO litigation. (Reuters)