China loses WTO appeal in stainless steel dispute with EU, Japan

Chinese dragon

china_dragon_eating_man_credit_flickr_travis.jpg [Travis/Flickr]

China lost an appeal ruling yesterday (14 October) in a World Trade Organization dispute in which Japan and the European Union had complained about Chinese use of anti-dumping duties on high performance, seamless stainless steel tubes.

A WTO dispute panel had largely ruled against China in February, but all three parties appealed, and the WTO’s Appellate Body strengthened the case against China, reversing points where the panel had previously backed Beijing.

The dispute was one of a series of often tit-for-tat trade complaints where China and its richer trading rivals sparred to protect their firms’ right to take advantage of each others’ markets, a rivalry that was supercharged by China’s faster economic growth and its growing share of world exports.

>> Read: EU slaps anti-dumping duties on China, Taiwan steel

China had alleged that Japanese and EU makers of the tubes, which are used in coal-fired power plants, were selling their product at an unfairly cheap price in China, and in 2012 it imposed an “anti-dumping duty” to restrict their imports.

Japan and the EU complained to the WTO in a bid to support producers such as Nippon Steel & Sumitomo Metal Corp, Tubacex S.A in Spain and Salzgitter AG in Germany.

At the peak in 2008, Japan exported around $224 million of the pipes to China while the EU made sales of $283 million, according to a Reuters analysis of data from the International Trade Centre (ITC), a joint agency of the WTO and United Nations.

In 2012, exports from both the EU and Japan were worth less than $80 million, the ITC figures show.

The WTO appeal ruling is final and China will now be asked to bring its rules into line with global trade rules.

The EU said in a statement that the ruling was “of systemic importance.”

“It highlights again the shortcomings of Chinese trade defence investigations and provides guidance how the WTO rules on price effects, disclosure of essential facts and confidential treatment of information should be applied in the future.”

China’s Commerce Ministry expressed “deep regret” about the ruling and said it would “appropriately handle” the case according to WTO regulations, in a statement posted to its website late on Wednesday.

But the WTO ruling may be too late to repair any damage done to Japanese and EU exporters because such decisions do not have retroactive effect. Since the trade dispute erupted, China’s economic growth, including growth in electricity production, has slowed sharply. 

In 2008, the European Commission launched an investigation into imports of steel from China, South Korea and Taiwan, which European steelmakers have complained are being dumped on the market at below cost price, putting thousands of jobs at stake.

>> Read: Commission to probe cheap China steel imports

The EU executive has opened a series of inquiries into alleged dumping from China in a broad range of industrial sectors.

In 2012, it launched its largest investigation to date, into alleged dumping of, and subsidies for, an annual 21 billion euros of solar panels and components China exports to the EU.

It followed up the year after with an investigation into industry claims that Chinese solar glass producers are dumping their products in the European Union at below market value

>> Read: EU launches anti-dumping probe of Chinese solar glass

Beijing hit back immediately, by launching its own anti-dumping and anti-subsidy probe into European wine.

>> Read: EU-China solar trade spat escalates as Beijing hits back with wine probe

In 2013, EU states agreed to impose duties on imports of Chinese plates and other table and kitchenware.

>> Read: EU countries to impose anti-dumping duties on Chinese ceramics

In the telecoms sector, the EU executive is also investigating alleged subsidies to Huawei and ZTE – emanating from export credits given by Chinese banks – which the EU executive believes offer the Chinese companies preferential terms for investing into foreign markets.

>> Read: EU holds off China telecoms trade probe amid US 'cyber-espionage' claims

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