China Trade War Escalates
Just one month after we discussed ArcelorMittal's 'demand' that Europe seek sanctions against China's steel tariffs (following unfair 'tit-for-tat-wine' Chinese trade practices, after EU solar panel tariffs), Reuters reports that the EU is indeed to press the WTO to rule against Chinese duties on imported steel. While history never repeats, it merely rhymes, this episodic collapse in economies, markets, and trade is now showing signs of the same desperation as during the Great Depression as intervention, devaluation, and now protectionism are brought to bear to save the domestic economy at all costs. The EU joins Japan in this rapidly escalating trade war with Beijing as they believe "retaliation by the Chinese is now recognized," something not allowed under WTO rules, "and so they have a good chance to win." This will not help either trade relations with the world's 'growth' engine or the credit-crunched nation's massive glut of commodities (and commodity-backed credit lines).
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.
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 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.
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