The European Union has filed an official complaint against China’s imposition of anti-dumping duties on steel imports, said the World Trade Organisation on Thursday, in the latest of a series of bilateral disputes that has sparked fears of a trade war breaking out.
The complaint, six months after Japan filed a similar case, centres on high-quality steel products that China needs to build new power plants and is crucial for its plans to upgrade and clean up its electricity infrastructure.
According to the WTO, the EU is charging that China’s anti-dumping duties of between 9.7 to 11.1 percent are “significantly hampering access to the Chinese market” and is incompatible with WTO rules, “both on procedural and on substantive grounds.”
In its defence, Beijing has said it imposed the tariffs because it suspected steel imports from its Japanese and European rivals were underpriced.
The EU complaint sets in motion the process of bilateral negotiations and consultations. If the talks are not successful after 60 days, the EU can ask the WTO to establish a panel to rule on the case and its decisions are binding on its members.
Earlier this week, the European Commission said it would defend Europe's struggling steel industry, hit by falling demand, rising costs and fierce competition from China, with every means at its disposal.
The WTO complaint raises the stakes in a series of tit-for-tat disputes that has sparked fears of a trade war breaking out between China and the EU.
In addition to steel tubes, the Commission has accused China of selling solar panels below cost in Europe and in June allowed the imposition of punitive duties of 11.8 percent. The Commission has also threatened an investigation into China’s key telecom equipment firms.
In retaliation, China has launched an anti-dumping investigation on European wine imports and has warned that it has “many cards in hand” to safeguard its economic interest.
Last week, the Global Times, a state-run news outlet, said:
China has many cards to play, including significant holdings of European bonds and investments in EU countries. It is the situation on the battlefield which determines how negotiations proceed in warfare ... Trade wars are similar.
But EU officials insisted that no link should be made between a specific trade defence measure, as in the case of Chinese solar panels, and action taken at the WTO which took months to put together. The timing was a "coincidence," they said.
The EU is not a major market for China's seamless steel pipes, while China is a relatively big market for the EU's exports of these products, which means the EU doesn't have an advantage in the case, said Zhang Lin, senior researcher at the Lange Steel Information Research Center.
"If the trade war continues in the steel industry, it will largely fail to affect the Chinese market, but it will indeed hurt the EU's seamless steel exports," she said.