The Chinese invasion

Trade officials in Brussels could soon be facing a flood of demands for protection from Chinese imports, with rumours now circulating that, as well as furniture makers, European manufacturers of ceramics are planning to ask for anti-dumping duties to be imposed on Chinese tableware imports.

The EU is already widely expected to impose anti-dumping duties on leather shoe imports from China (19.4%) and Vietnam (16.8%) at a meeting of its Anti-dumping Committee on 21 March. "I believe the duties will go through. They are quite low, it's one vote per member state and abstentions count as approval," says a Brussels lobbyist following the case.

"I have heard reports that Italian ceramic tableware manufacturers are trying to gather support for an anti-dumping case," said a Brussels-based representative of one of the EU's biggest retailing groups. To launch a Commission anti-dumping case manufacturers accounting for 25% of EU output have to agree.

Last year the EU took action to put quota limits on imports of Chinese sweaters and T-shirts. This followed an import surge following the end of the decades-old international Multi-Fibre Agreement which restrained free trade in textiles.

Further protectionist moves against China by the EU, which saw its trade deficit with China soar to almost 1% of gross domestic product (EUR 74 billion) last year, would make a fast-deteriorating global trade environment even more febrile.

At the beginning of the month the US House of Representatives Appropriations Committee stunned Washington by voting 62-2 to oppose, on national security grounds, the acquisition by Dubai World Ports of Britain's Peninsular and Oriental group. P&O operates six US port facilities. President George W. Bush had publicly supported the deal.

The rebuff raises question-marks over the ability of a president, whose authority has evaporated, to pursue a free trade agenda. Congress is also calling for tougher economic policy pressure on China now that the US current account deficit, which hit a monthly record of $68.5bn (EUR 57.18bn) in January, is running at an annual rate of over 7% of gross domestic product and likely to rise again this year. "The American people need a Congress and an administration that will get tough on trade policy and rein in these runaway deficits," said Benjamin Cardin, the Maryland Democrat who chairs the key House Ways and Means subcommittee on trade.

Meanwhile in Europe itself, protectionist pressures are visibly mounting. France is protecting energy giant Suez from an Italian takeover bid, Spain is trying to block Germany's E.ON from acquiring energy giant Endesa, Poland is obstructing a bid which would put two of three largest banks in Italian hands, and France and Luxembourg are opposing Mittal Steel's bid for Arcelor.

All the manoeuvres are symptomatic of protectionist reflexes as nations struggle to come to terms with either their poor economic performance or the pressures exerted by the deepening integration of the global economy or both. In a recent trade analysis, US giant Citigroup commented that Spain's current account deficit had "exploded" in the first three years while France and Italy had moved from surplus to deficit.

Italy's case is particularly worrying since it is one of the sources of the most persistent pressure for protection from China. This reflects its specialisation in medium- and low-technology goods and its eroding competitiveness internationally. Citigroup analyst Carmen Nuzzo says that, because of the inflexibility of their economies, several EU countries will find it hard to shift production to industry sectors in which global demand is most dynamic.

This is at a time when China is exporting more hi-tech products to the EU.

The two biggest product categories for imports from China are audio and video equipment and power generation equipment.

Last weekend in London Peter Mandelson, the trade commissioner, held talks with trade ministers from the US, Brazil, Japan, India and Australia in an effort to move the global Doha Development Round trade liberalisation talks forward.

There were no breakthroughs but the pressures to reach a trade deal are mounting.

• Stewart Fleming is a freelance journalist based in Brussels.

Major analysis feature in which the author predicts further demands from European businesses for anti-dumping measures to be taken to curb Chinese imports to the EU. Article also looks at related action by the United States and the general trend of economic protectionism in Europe.

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