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China launches action at WTO to keep US, EU markets open
Published on: 2009-08-03
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BRUSSELS -- China launched formal complaints at the World Trade Organization in a bid to take down trade barriers set up by the European Union and U.S., a sign Beijing is fighting more aggressively to keep foreign markets open for its exports.


The targets of its two complaints are high EU import tariffs on Chinese screws and a U.S. ban on the import of Chinese poultry. Beijing had already announced the suit against the U.S.


China insists it is countering protectionism and fears about job losses at home in a slumbering global economy. Brussels and Washington say the sanctions are justified by lax business and health rules in China. The EU and the U.S., the two biggest buyers of Chinese goods, combined for $610 billion of imports from China last year.


In both cases, the WTO could dismiss the complaints or give China the right to reduce imports by as much as it lost in trade by imposing higher import tariffs on some EU and U.S. goods by the end of 2010.


The two suits are signs of China's coming-of-age in global trade politics, say trade experts. When China joined the WTO in 2001, its exports took off so fast that minor impediments to trade weren't even noticed.


"It took them a few years to care about and understand the process," says Simon Lester, chief administrator at WorldTradeLaw.net LLC, a Washington-based consultancy.


At a multilateral trade summit in Geneva in July 2008, China played a leading role for the first time, says Mr. Lester. China has recently built a sparkling trade mission down the street from WTO headquarters in Geneva. It has started spending more money on legal advice, say lawyers for major trade-law firms.


On Friday, Chinese trade officials accused the EU of failing to follow WTO procedure when it raised tariffs on the import of steel fasteners, the technical word for screws and similar parts, earlier this year.


The EU said Chinese companies were benefiting from tax breaks and bargain raw-material costs, then illegally "dumping," or selling below cost, fasteners on the EU market. Chinese prices were 30% to 50% lower, the EU said.


Under WTO law, if domestic companies are losing substantial sales, countries can fight dumping with increases in import tariffs. That is what the EU did in January, hitting Chinese fastener imports with duties of 26.5% to 85% for the next five years. Sales -- almost a billion dollars a year -- fell off dramatically.


The suit on Friday is the first time China has challenged a European antidumping duty at the WTO. Brussels has levied over 140 antidumping duties against China since 1979. China filed a similar complaint against the U.S. last year over paper products.


EU officials defended the duties. "Antidumping measures are not about protectionism, they are about unfair trade," said Lutz Guellner, a spokesman for the European Commission. "The EU's 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.'


China also petitioned the WTO to launch an investigation of a U.S. ban on chicken imports. Beijing had already announced its intention to launch the suit a month ago. The U.S. has banned the import of Chinese poultry products on health grounds since 2007.


In its suit, Beijing complained Washington was imposing "naked discriminative measures." U.S. officials say they are still studying whether Chinese chicken is safe to eat. China still imports U.S. poultry, mostly feet and other products.

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