June 16, 2020

EU Challenges China’s Trade Expansion With Landmark Tariff

The European Union fired a warning shot at China over its global trade ambitions with an unprecedented tariff decision to counter Chinese subsidies to exporters.

For the first time, the EU on Monday took aim at alleged market-distorting aid granted by a country to exporters located in another state. To date, such European duties have focused only on subsidies provided by the country where the exporters are based.

The dispute involves EU imports from Egypt of glass fiber fabrics, an industrial good used in everything from wind turbines to sports equipment. The two Egyptian exporters of such fabrics are subsidiaries of China Jushi Co. and Zhejiang Hengshi Fiberglass Fabrics Co.

Jushi Egypt for Fiberglass Industry SAE and Hengshi Egypt Fiberglass Fabrics SAE are based in the China-Egypt Suez Economic and Trade Cooperation Zone, which is part of China’s controversial “Belt and Road” global infrastructure-development plan.

The EU said that Jushi Egypt and Hengshi Egypt received financial benefits from the Chinese and Egyptian governments and that the aid, along with subsidies for glass fiber fabrics shipped directly from China, unfairly undercut the bloc’s own producers such as Finland-based Ahlstrom-Munksjo Oyj in the European market.

EU manufacturers that also include European Owens Corning Fiberglas SPRL in Belgium and France-based Chomarat Textiles Industries SAS suffered “material injury,” the European Commission, the 27-nation bloc’s executive arm in Brussels, said in the Official Journal.

China lashed out at the EU decision, saying it violated World Trade Organization rules.

Europe is stepping up efforts to guard against expansionist Chinese commercial policies, part of a balancing act that echoes U.S. concerns about China’s economic rise while aiming to stay within the WTO framework. By contrast, Washington has taken unilateral action against Beijing in ways that sidestep the WTO and that have prompted European criticism.

The EU is threatening in two other trade investigations to target alleged Chinese aid to exporters based outside China. One inquiry by the commission focuses on EU imports of glass fiber reinforcements from Egypt; the other probe covers shipments of stainless steel from Indonesia to the bloc.

Jushi Egypt and Hengshi Egypt are related through a bigger Chinese parent company — China National Building Material Group. The EU anti-subsidy duty on glass fiber fabrics from Egypt is for five years.

(Source: Yahoo Finance)