EU to take China to WTO in fresh dispute on steel pipes

BRUSSELS (AFP) - The European Union (EU) raised the stakes in a series of tit-for-tat trade disputes with China, saying on Thursday that it would file a complaint at the World Trade Organisation (WTO) over Chinese tariffs on imported EU stainless steel pipes.

EU Industry Commissioner Antonio Tajani told French radio station Europe 1: "The European Commission is going to lay a complaint before the World Trade Organisation concerning China."

Mr Tajani gave no further details but a European source in Geneva, home of the 159-nation WTO, said earlier that a complaint was due to be filed by the end of the week.

Mr Tajani had warned this week that the EU would defend its steel industry, hit by falling demand, rising costs and fierce competition from China, with every means at its disposal.

In Brussels later on Thursday, Mr Tajani declined to comment directly on the complaint to the WTO, saying only: "We have our steel action plan which is very clear... we have to protect Europe from unfair competition."

At the WTO, nations can ask the global body to decide whether fellow members are in breach of the rules of international commerce and can be granted the right to impose retaliatory measures.

Normally, the EU move would likely annoy Beijing but in this case there is an added twist since Japan has filed a similar steel case against China at the WTO, which in May set up a dispute settlement panel at Tokyo's behest.

In the past, the WTO has often folded multiple complaints into a single case, posing a major challenge for China which joined the body in 2001 only after exhaustive negotiations.

The last few months have seen China and the EU lock horns over a range of trade issues, stoking concerns that they could slide into a dangerous stand-off.

In addition to steel tubes, Beijing has launched anti-dumping probes into imports of EU wine and chemicals, replying in kind as the EU imposed punitive tariffs on Chinese solar panels and threatened an investigation into China's key telecom equipment firms.

Beijing warned that the wine probe - announced just after the solar panel decision - "signals that the country will safeguard its major economic interests - and it has ample cards in hand to do so".

"The probe into wine imports could be followed by more moves if the EU continues to ignore China's interests," the China Daily said.

The government-run paper also pointed out the euro zone's "lingering debt crisis," saying that EU protectionism "will only incur tit-for-tat retaliations and worsen its economic prospects".

The Global Times was even blunter.

"China has many cards to play, including significant (holdings of) European bonds and investment in EU countries," it said.

"It is the situation on the battlefield which determines how negotiations proceed in warfare... Trade wars are similar."

Earlier this week, 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.

China is the EU's second-biggest trading partner, taking EU imports worth US$212 billion (S$262 billion) last year and exporting US$334 billion.

Given the huge stakes, the prospect of a stand-off with Beijing has stoked deep divisions in the EU, with Germany pushing for a negotiated solution while France says tough sanctions are needed to defend EU interests against unfair Chinese inroads.

EU-China trade ties will be discussed on Friday when EU trade ministers meet in Luxembourg to discuss opening talks with the United States on what would be the world's biggest Free Trade Agreement.