BRUSSELS (Reuters) – The European Union plans to lodge a case with the World Trade Organization against Chinese duties on specialized steel tubes, EU sources said on Tuesday, opening another front in a rapidly escalating trade conflict with Beijing.
The move will allow the EU to join a related complaint filed by Japan against Chinese duties in December.
The EU complaint would seek to overturn Chinese duties on exports of seamless stainless steel tubes made by firms such as Spain’s Tubacex S.A (TUBA.MC ) and Germany’s Salzgitter A.G (SZGG.DE ), the sources said. The sources asked not to be identified because of the sensitivity of the case.
The filing, which may come as soon as Thursday or Friday, will send a signal to China that the EU is willing to take legal action against any duties it considers to be based on retaliation rather than objective evidence.
It follows China’s decision last week to investigate alleged dumping of EU wine in apparent retaliation against the EU imposing provisional duties on Chinese solar panels, the biggest trade case the EU has launched.
WTO rules prevent members from leveling tit-for-tat sanctions, instead requiring proof assembled via a thorough investigation that a country’s industry has suffered damage before any duties can be imposed.
The sources said the stainless steel case was separate from the dispute over solar panels and wine. Under WTO rules, the EU had a limited time to join the complaint filed by Japan.
In February, the EU won a similar WTO dispute against Chinese duties on X-ray scanners, with a settlement panel in Geneva agreeing the duties imposed by China had not been the result of a proper and thorough investigation.
One EU diplomat said victory in the X-ray scanners case, which was the first time Brussels had challenged Chinese trade defense measures before, emboldened the EU. <-ID: nL6N0BQDBT>-
“The Commission is quite confident that retaliation by the Chinese is now recognized, so they think they have a good chance to win,” the source said.
Another source said the European Commission, the EU’s executive, will brief the Chinese on Thursday before opening the complaint on behalf of the EU, ahead of a meeting of EU trade ministers in Luxembourg on Friday.
The Commission’s spokesman on trade issues was not immediately reachable for comment.
Japan is challenging the Chinese steel tube duties and how they were applied, alleging China did not have enough evidence and kept what it did have secret, shielding the companies who had complained.
Used in coal-fired power plants, the tubes are made in Japan by firms such as Nippon Steel & Sumitomo Metal Corp (5401.T ) among others.
Japanese stainless steel tube exports to China were worth 5.8 billion yen ($58.50 million) in 2011. EU exports are estimated to be in the tens of millions of euros.
(Reporting by Ethan Bilby- editing by Luke Baker)