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EU levies on Chinese fasteners may fuel tension

(China Daily/Agencies)
Updated: 2008-11-26 10:01

The European Union plans to impose tariffs as high as 87 percent on Chinese screws and bolts in a case that may prompt China to complain to the World Trade Organization, said a group of producers being targeted.

The five-year duties would apply to EU imports of iron or steel fasteners worth 575 million euros ($748 million) last year, said the Jiaxing Association of Fastener Import and Export Companies including Gem-Year Industrial Co.

Fasteners, used for everything from automotive parts to furniture, are made in the EU by companies, such as Italy's Fontana Luigi SpA, that say trade protection is needed to counter below-cost - or "dumped" - sales in Europe by Chinese competitors.

The European Commission will recommend that EU governments impose the levies no later than Feb 9, the Chinese industry group said in Brussels at a briefing organized by Crowell & Moring LLP lawyer Robert MacLean, who represents the Jiaxing Association and provided the commission's proposal.

MacLean and association officials said the anti-dumping duties would threaten up to 800,000 jobs in China and are unjustified because EU producers haven't suffered sufficient harm from the imports.

"I'm pretty sure a WTO challenge will come," MacLean said. China accounts for about 60 percent of EU imports of the product.

Chinese fastener manufacturers increased their share of the EU market to 26 percent in the 12 months through September 2007 from 17 percent in 2004, according to the commission proposal made available by MacLean.

EU producers suffered a fall in their combined home-market share to 17 percent from 22 percent in the same period, when consumption expanded by almost a third, it says.

"The injury in this case mainly takes the form of loss of potential sales volume in a growing market," according to the proposal.

The commission, the 27-nation EU's regulatory arm, has no immediate comment on the case, spokesman Peter Power said.

The matter will be discussed at a Nov 26 meeting involving representatives of national governments, a majority of which must back the trade protection for it to be imposed across the EU, MacLean said.

Zhang Feng, deputy secretary general of the Jiaxing Association, said the commission should have distinguished between Chinese fasteners and EU fasteners.

The Chinese products are largely for the general industrial and do-it-yourself markets, while EU fasteners are for more specialized uses such as automotive and aircraft, he said.

"We are complementing each other, not competing directly with each other," Zhang said. "We consider this decision fundamentally flawed."

The commission proposal, while saying Chinese exports to the EU were concentrated in market segments such as "standard screws and bolts" and European manufacturers helped boost profitability by focusing on more expensive "high-quality" products, rejects the association's argument.

"There is nevertheless a significant market overlap," according to the proposal.