* EU Commission wants right to initiate trade cases itself
* Firms lodging trade complaints fear retaliation from
governments
* De Gucht: rise of state capitalism changes trade dynamic
By Sebastian Moffett
BRUSSELS, May 10 (Reuters) – The European Union is planning
new trade defences to counter subsidies and dumping by trading
partners such as China, including a more active role for its
executive Commission, the bloc’s trade chief said on Thursday.
New EU moves would intensify the fight by the European Union
and the United States against what they say are unfairly priced
and subsidised imports from the world’s second-largest economy.
The European Commission imposes duties on goods it thinks
are being dumped – sold for less then they are worth – or
unfairly subsidised and damaging to EU industry.
But the Commission currently only acts after receiving a
complaint from a European company, and affected firms often fear
retaliation from state-capitalist countries, Trade Commissioner
Karel De Gucht said in a speech.
“It is undeniable that many European companies are unwilling
to come forward and make justified trade defence complaints due
to fear of consequences for their business,” he told a Brussels
conference on modernising Trade Defence Instruments.
“One idea is that if companies are afraid of retaliation,
the Commission can step in and launch cases on its own
initiative. Under such …(a) procedure no government could
blame a European company for the launch of the case.”
EU officials have said China appears to act against
anti-dumping and subsidy cases by filing its own retaliatory
cases. In response, the EU Commission has already allowed some
companies that file dumping or subsidy complaints against China
to remain anonymous. Several U.S. lawmakers have pressed the
Obama administration to take a similar line.
Analysts say the proposed new measure had its difficulties.
“You can deflect suspicion from state-capitalist governments
of individual companies,” said Fredrik Erixon, director of the
European Centre for International Political Economy, a
Brussels-based think-tank. “But the strategy is hard, because
it’s easy to guess the companies.”
State capitalism – close government control of privately
owned business – has been a target of trade complaints from
Europe and the United States since Japan’s rise decades ago.
“Another change is linked to the rise of what has been
called state capitalism. It is frequently used to describe
China’s system, but it can also be applied to Russia, Vietnam
and other emerging economies,” De Gucht said.
TRADE DISTORTIONS
De Gucht said that under state capitalism “a range of
government policies could be used to give an unwarranted
competitive advantage to a national company – from cheap finance
to cheap raw materials”.
“This kind of distortion can be difficult to prove in a
legal process such as ours,” he said.
The European Union has become more active in the past year
in fighting what it sees as unfair trade practices. In 2011, the
European Union issued its first challenge to Chinese state
subsidies when it raised duties on imports of glossy paper from
China.
And EU trade officials also looked into complaints over
cheap credit to Chinese firms – low insurance premiums, long
repayment terms and “low or subsidised” interest rates. These
were blamed for helping Chinese firms underbid EU rivals for big
infrastructure projects, hurting EU energy, telecoms and
transport developers.
But the bloc’s last substantial update of its trade defence
rules came 16 years ago, since when much has changed, De Gucht
said.
EU member countries are particularly vulnerable as pessimism
and aging populations dampen domestic consumer demand, making
growth in the bloc increasingly dependent on trade with
faster-growing economies.
China is the European Union’s second biggest trading partner
after the United States and the bloc is China’s biggest. Trade
between the two is forecast to post a record high of 500 billion
euros this year.
But the relationship is tense. De Gucht has in the past
complained that China subsidises “nearly everything”, making it
hard to compete. And on Thursday, he asked for suggestions on
how better to deal with threats of retaliation and to get more
companies to cooperate.
This year has already seen several accusations. In February,
Brussels opened anti-dumping investigations into ceramics and
pipe fittings made in China.
And the European Union joined the United States and Japan in
March to challenge China’s restrictions on exports of rare-earth
metals, which are used in advanced industries such as
electronics and renewable energy.
Later that month, the European Union said it might block
non-EU companies from bidding for government contracts after
European software companies complained of being sidelined in
bids for government contracts in China.
China too has complained of dumping by EU companies. On
Tuesday, Beijing said it had set anti-dumping duties on some
stainless steel tubes imported from the European Union and
Japan.
