EU Plans First Anti-Subsidy Duties on China, Targeting Paper

The European Union plans to impose anti-subsidy tariffs against China for the first time, targeting imports of paper with levies as high as 16 percent to counter trade-distorting government aid.

The European Commission proposed introducing the duties for five years to counter the alleged unfair subsidies to Chinese exporters of coated fine paper, which is used for books, brochures and magazines. The recommendation is in a Feb. 3 commission report into the need for levies requested by producers in Europe including Sappi Ltd.

“Anti-subsidy measures should be imposed in order to prevent further injury being caused to the union producers by the subsidized imports,” the commission, the EU’s trade authority in Brussels, said in the 61-page report obtained by Bloomberg News. The conclusion will form the basis of a decision the EU’s national governments must make by May 17.

Europe’s 4 billion-euro ($5 billion) market for coated fine paper is a focal point of trade tensions after Chinese Premier Wen Jiabao snubbed European pleas last October to let the yuan’s exchange rate rise faster. To bolster European exporters and narrow its trade deficit with China, the 27-nation EU says the Chinese government should follow up more ambitiously on its June pledge to ease the yuan off a two-year peg to the dollar.

In November, as part of a parallel trade inquiry, the EU introduced provisional duties as high as 39.1 percent on Chinese coated fine paper to counter below-cost imports, a practice known as dumping. EU governments face a separate mid-May deadline to decide whether to turn these anti-dumping levies into definitive five-year measures.

Europe imposes anti-dumping duties on Chinese goods ranging from textiles and chemicals to shoes and bicycles. China faces such EU taxes on about 50 products, more than any other nation. Such levies aim to counter below-cost imports.

To contact the reporter on this story: Jonathan Stearns in Brussels at jstearns2@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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