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EU should resist protectionism temptation

(Xinhua)
Updated: 2009-08-08 08:23

Faced with the worst economic crisis in decades, the European Union (EU) is losing ground to the growing temptation of protectionism. China, one of its major trading partners, is the main target.

Last week saw a new wave of EU anti-dumping measures against China. In two days, the 27-nation bloc made two separate decisions to impose definitive anti-dumping duties on Chinese steel wire rods and seamless pipes.

These measures are just part of a greater EU trade war against Chinese steel and iron products, which was launched two years ago.

Also last week, the Chinese government filed a complaint with the World Trade Organization (WTO) on anti-dumping measures taken by the EU early this year against the import of Chinese iron or steel fasteners. This was the first time that China resorted to the Geneva-based global trade body in a dispute with the EU.

This move suggested Beijing was growing frustrated with the repeated use of anti-dumping measures against Chinese products by the EU and was beginning to use international trade rules to protect its own interests, said Duncan Freeman, a researcher at the Brussels Institute of Contemporary China Studies.

"It is not only Chinese officials who criticized the EU for abusing anti-dumping actions. There are a lot of people within the EU who also believe the same thing. There are European industries exploiting the system to defend their interests," he said.

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In the first six months, the EU launched two anti-dumping investigations, both were targeted at China. Over the same period, the EU also made three decisions to impose provisional anti-dumping duties on Chinese products, including wire rods, aluminum foil and seamless iron or steel pipes.

In addition, all three anti-dumping measures imposed by the EU in the first half of this year were directed against China. The measures concerned fasteners, PSC wires and candles.

Anti-dumping duties of up to 50 percent on Chinese-made candles came less than one week after the G20 summit in London.

Although leaders of the world's major economies, including EU countries, pledged to refrain from protectionism and stick to open trade in the economic downturn, the EU appears to have already forgotten its commitment.

The measure was not only included by World Bank President Robert Zoellick in a blacklist of anti-free trade decisions made since the summit, but was also decried by EU business groups.

"A vote for imposing duties on candles is a vote for protectionism. It will benefit a handful of European producers at the expense of hard-pressed retailers," said Alisdair Gray, director of the British Retail Consortium in Brussels.

Freeman said the EU and China should work their way out of the crisis using open trade instead of resorting to protectionism.

"Protectionism will not help either side. Trade has brought benefits to both sides in the EU-China relationship, even though there is an imbalance in favor of China," he said. "In a period of severe economic downturn, the most important step both sides can take is to ensure that they do not close their markets."

In a bid to promote bilateral trade and investment, China has sent four buying missions to European countries this year, which resulted in business contracts worth billions of US dollars.

"The buying missions are an important gesture to the EU and demonstrate that the Chinese government is willing to take steps to address European concerns," Freeman concluded.

Protectionism or not? The choice is the EU's.