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28th May 2018

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Nuts and bolts: WTO ruling helps China in EU dumping wars

  • China says it should automatically get market economy status at the end of 2016 (Photo: olekvi)

Trade arbitrators have said the EU wrongfully imposed anti-dumping duties on Chinese screws, in a verdict which could help China’s bid for market economy status.

The decision, on Monday (18 January) by the Geneva-based World Trade Organisation (WTO), ends a seven-year legal battle.

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The EU imposed punitive tariffs on Chinese iron or steel screws, nuts, and bolts in 2009 on grounds that China sold them at below-market prices to undercut competition - a practice known as “dumping.”

The sanctions, according to the Reuters news agency, prompted Chinese exports of the products to the EU to fall from $1 billion in 2008 to some $200 million a year.

The Chinese ministry of trade said on Monday: “The measures have had a negative effect on exports from China of around $1 billion and more than 100,000 jobs.”

Market economy

The WTO ruling comes amid talks on whether the EU should recognise China as a market economy - a decision which means Europe could no longer impose anti-dumping levies.

The European Commission, last week, postponed its recommendation on the issue, now expected in the second half of the year.

EU sources say the Dutch EU presidency, Germany, and Nordic countries support granting the status on grounds it would boost Chinese investment in Europe.

But Germany wants safeguards for vulnerable European industries, such as textile, steel, and solar panel producers, while Italy is strongly opposed.

The US, for its part, has warned the move would cost the EU up to 3.5 million jobs and a 2 percent contraction in GDP.

But China says that, under the terms of its WTO accession in 2001, it should get the status “automatically” by the end of 2016.

Speaking on the WTO ruling from Beijing on Monday, Fu Donghui, a partner at Chinese law firm Allbright Law Offices, said, according to Reuters: “I think it will be a major boost for Chinese market economy status at the end of the year.”

Further action?

The Chinese trade ministry also indicated it might take “further action” - to seek financial compensation or to impose trade sanctions on the EU - if Europe doesn’t comply with the screws verdict.

The EU, last year alone, initiated 22 anti-dumping investigations against China.

The products targeted include: hand pallet trucks; solar panels; polyester yarn; iron and steel tubes; PET (a kind of plastic); aluminium wheels; sodium gluconate; silicon; ceramic foam; sodium cyclamate; molybdenum wires; aspartame; biodiesel; cold-rolled flat steel; steel-concrete reinforcements; and tartaric acid.

Divided EU debates China market economy status

The EU Commission will, on Wednesday, debate the sensitive issue of China “market economy status,” with nerves jangling in European industry over cheap Chinese goods.

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