The European Union plans to lodge a case with the World Trade Organisation against Chinese duties on specialised steel tubes, EU sources said yesterday.
The move, which will open another front in a rapidly escalating trade conflict with Beijing, will allow the EU to join a related complaint filed by Japan against Chinese duties in December.
The EU complaint would seek to overturn Chinese duties on exports of seamless stainless steel tubes made by firms such as Tubacex of Spain and Salzgitter of Germany, said the sources.
The filing, which may come as soon as tomorrow or Friday, could send a signal to Beijing that the EU is willing to take legal action against any duties it considers to be based on retaliation rather than objective evidence.
It comes after Beijing's decision last week to investigate alleged dumping of EU wine, in apparent retaliation against the imposition of provisional duties on Chinese solar panels, the biggest trade case the EU has launched.
WTO rules prevent members from levelling 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 sources said the stainless steel case was separate from the dispute over solar panels and wine. Under WTO rules, the EU had a limited time to join the complaint filed by Japan.
In February, the EU won a similar WTO dispute against Chinese duties on X-ray scanners, with a settlement panel in Geneva agreeing the duties imposed by Beijing had not been the result of a proper and thorough investigation.
One EU diplomat said victory in that case, which was the first time Brussels had challenged Chinese trade defence measures, emboldened the EU.
"The [European] Commission is quite confident that retaliation by the Chinese is now recognised, so they think they have a good chance to win," the diplomat said.
Another source said the commission, the EU's executive, will brief the Chinese tomorrow before opening the complaint on behalf of the EU, before a meeting of EU trade ministers in Luxembourg on Friday.
Japan is challenging the steel tube duties and how they were applied, alleging that Beijing did not have enough evidence and kept what it did have secret, shielding the companies who had complained.
The tubes, used in coal-fired power plants, are made in Japan by firms such as Nippon Steel and Sumitomo Metal.