alleged dumping
2008-08-14

For years, European makers of screws and steel fasteners watched as their sector struggled and factories closed, hit by fierce competition from China. Now, a group of manufacturers from the industrial zones of 12 European countries has joined a list of companies asking the European Union to stop what they say are unfair imports.
Recently, the European Commission has issued an interim report on its investigation of alleged dumping of a wide range of fasteners by Chinese producers. The investigation started in November 2007 and a decision on preliminary tariffs was due by 8 August. The report concludes "there are several crucial elements of the investigation which merit further careful analysis". As a result the Commission has proposed that provisional measures are not applied but that it would continue to investigate the case. Outstanding issues, according to the report, include verification that the production volume of the complainants exceeds the minimum 25 percent of EU production required for the complaint to be valid. There have been persistent rumours, but no firm evidence, that a significant complainant may have withdrawn support, which could mean the figure falling below the required threshold.
Trade disputes between Brussels and Beijing are on the rise since the EU's trade deficit with China has ballooned, last year totaling €160 billion, or $249 billion at current exchange rates.
Those imports have soared to grab nearly 30 percent of the EU's €4 billion market in fasteners, up from 9 percent as recently as 2002, the European manufacturers said, bristling at suggestions they were no longer competitive. "We don't have all the answers to prove it but when you get products exported to Europe at a price below the cost of raw material, and the price of raw material is the same" around the world, "it must be a matter for consideration," Donati said.
China routinely denies that it breaks trade rules and says European countries resort to protectionism against its low-cost advantage.
The EU, like the United States, does not consider China to be a market economy, saying the state still plays too big a role in areas like banking and industrial policy. But it does consider offering exceptions to companies on an individual basis. Without market economy status, the EU uses other countries to judge the costs of Chinese companies, like India or Brazil where prices are usually higher, making a finding of dumping almost inevitable in many cases, trade specialists say.
Chinese officials protest that the EU cannot prove its suspicions about illegally priced steel, as it only began a separate dumping investigation into Chinese steel wire rod in early May.
China is also worried that Brussels may be more lenient to three European companies producing fasteners in China.
An EU official said the suspicions of artificially low steel input prices had so far affected only the decision to reject a request from Chinese screw exporters for market economy treatment. No decision has been made on whether they should pay anti-dumping duties, the official said on condition of anonymity.
But the EU seemed to be creating a precedent that would make it easier to hit Chinese exporters of machinery or cars, for example, with duties on the grounds that they, too, used steel or components considered to be subsidized, the Chinese official said.
The EU is in the process of investigating a broad range of primary steel made in China. Any decision by the EU trade commissioner, Peter Mandelson, would have to be approved by the bloc's member states, which have split acrimoniously over previous dumping cases.
Applying duties would be a setback to European importers and distributors of Chinese fasteners. They say it would push up prices to little gain of EU manufacturers, who were suffering against low-cost exporters in Turkey and Taiwan before China.
It could also affect slow-moving negotiations between the EU and China for a new umbrella trade and investment agreement, possibly sending a tough signal from Brussels as it tries to persuade Beijing to speed up the modernization of its economy and open up more to foreign investment and competition.
As Brussels prepares its decision on the fasteners case, European manufacturers say they are running out of time. They want the EU to impose duties that could more than double the price of Chinese fasteners.