China imposes first anti-subsidy duties on EU

China hit the European Union with its first anti-subsidy duties on Monday just days after the EU imposed a five-year increase in duties on imports of Chinese glossy paper in its first challenge to Chinese state subsidies. The Ministry of Commerce's decision on the anti-subsidy duties, targeting imported potato starch, may have come early. When it raised separate anti-dumping duties on EU potato starch in April, it hinted that a decision on the anti-subsidy duties would come by August.
-- High-profile dispute involves small areas of trade
The Ministry of Commerce said China's first anti-subsidy investigation against the EU found EU firms enjoyed stock starch subsidies of as much as 11.19 percent, singling out producers Roquette Freres at 7.7 percent and Avebe at 11.19 percent. "Starting May 19, Chinese importers of EU potato starch must, according to the subsidy rates for each company established in this decision, pay corresponding anti-subsidy duties at customs," a statement on the ministry's website(mofcom.gov.cn) said.
China's move followed the EU's imposition on Saturday of a five-year increase in duties on imports of glossy paper from China to combat what it says is illegal Chinese state aid that is hurting EU producers. The flare-up in trade tensions comes as European Council President Herman Van Rompuy makes a four-day visit to China this week, a trip likely to feature Van Rompuy reassuring China about its role in buying distressed European debt.
State media quoted Chinese President Hu Jintao as telling Van Rompuy during a meeting in Beijing on Monday that a "stable, prosperous and developing Europe" was good for the world.
"No matter whether in the past, now or in the future, Europe is a trustworthy partner," state television paraphrased Hu as saying. It did not say if Hu mentioned the crisis in the eurozone. China signalled last month it was ready to buy more debt from the eurozone's weaker states, dubbed the periphery, in a move to help stabilise the bloc. There are no precise figures, but China has said it has bought billions of euros of debt.
Hu also called on Europe to ensure an "accommodating investment environment" for Chinese companies, adding that Beijing would continue to "provide convenience" for European firms investing in China. The growing but increasingly tense trade relationship is expected to be discussed too. China and the EU's trade in goods was valued at nearly 400 billion euros ($579.8 billion) last year. Experts said the anti-subsidy rulings from both parties are carefully calculated moves that do not imply an out-of-control trade war despite the timing.
"These are common tricks between countries, but even if you assume they are motivated by retaliation, it can never be proved," said Wang Jiangyu, a law professor and WTO expert at the National University of Singapore. The EU anti-subsidy duties, worth a maximum of 12 percent - paired with duties of up to 35.1 percent to counteract what it says is illegal pricing by Chinese exporters - were the first EU challenge to Chinese state subsidies. In a harshly worded statement over the weekend, China's Ministry of Commerce spokesman Yao Jian denounced the move as a violation of World Trade Organisation rules. The EU imported only about 130 million euros worth of Chinese coated fine paper in 2009, making it a small sector, but one seen to be leading a trend as the EU has vowed to combat Chinese state subsidies.