EU loses WTO case, China could seek trade sanctions

Tue Jan 19, 2016 12:54am EST
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By Tom Miles

GENEVA (Reuters) - China could demand trade sanctions against the European Union after winning an appeal on Monday in a dispute at the World Trade Organization over EU tariffs imposed on Chinese imports of screws, nuts and bolts made of iron or steel.

China has never before asked the WTO to impose trade sanctions since it joined the organization in 2001, but the end of the seven-year battle leaves the way open to a claim for compensation.

"The measures have negative effect on exports from China around $1 billion and more than 100,000 jobs from thousands of fastener producers in China," China's Ministry of Commerce said in a statement.

"It has resulted in huge economic losses to the Chinese industry, which has expressed strong dissatisfaction and firm opposition to the measures."

The EU must now comply with the ruling and remove its illegal tariffs or China would take "further steps", the statement said.

The value of China's exports of the products to the EU peaked at over $1 billion in 2008, but averaged about $200 million after the EU imposed punitive tariffs on the Chinese exports in 2009, according to a Reuters analysis of data from the International Trade Centre, a UN-WTO joint venture.

Under WTO rules, countries are allowed to punish "dumping" - or exports priced at an unfairly cheap level - to stop one country deliberately undermining its foreign rivals by artificially undercutting their prices.

But the use of anti-dumping tariffs is subject to strict rules and, in this case, China complained that the EU had not applied the rules correctly. WTO arbitrators agreed.   Continued...

European Union flags flutter outside the EU Commission headquarters in Brussels, Belgium, October 28, 2015. REUTERS/Francois Lenoir