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EU to overhaul “strained” measures to defend bloc from imports

The European Union wants to revamp the rules used to defend industries from unfair foreign competition, two months after imposing duties on Chinese shoes that divided the bloc's governments and provoked Chinese anger.

The European Commission says existing “trade-defense instruments” don't work and need updating because in the decade since they were last revised, more European companies have moved their manufacturing operations outside the bloc and depend on imports for raw materials. That means any penalties on imports may harm EU interests, said the commission, the EU's executive. “How we use these instruments is a highly politicized issue,” Trade Commissioner Peter Mandelson said in an e-mailed statement from Brussels today.

“Recent months have shown clearly what happens when EU member states cannot agree” and in “a system that doesn't work, or one in which solidarity and consensus are under strain, risks becoming inoperable.” In October, the EU's 25 governments applied two-year tariffs on €9.7 billion ($12 billion) of Chinese and Vietnamese shoes after a six-month row between the bloc's free- trade proponents and protectionists in Italy and Spain who wanted to defend their shoemakers from cheaper imports. Last month, China's government said it may retaliate against that decision and will support the country's shoe producers in an appeal against the EU duties.

In today's paper, the commission poses 32 questions on its current measures, which include duties to combat imports shipped below cost and unfair government subsidies. “Trade defense is the flip-side of the coin of openness, open to free trade, open to defending against unfair trade,” Mandelson said. “We have nothing to apologize for in defending ourselves against trade cheats, as long as this is based on genuine price distortion and anti-competitive behavior.” (Bloomberg)