Trade war unlikely

A CNN report on June 27 stated that China's action against EU-made toluidine products is "the latest salvo in a growing dispute between the key trading partners." An AFP report on the same day described the action as "the latest twist in a series of bitter trade disputes between the two economic giants."

Two weeks before China began to collect anti-dumping duties against EU-made toluidine, the EU issued a Commission Implementing Decision 2013/287/EU, administrating stricter measures regarding unauthorized genetically modified rice in rice products originating from China. Rice products exported by China will then face the strictest inspection process in the history of the EU.

The EU is China's second largest export destination of foodstuff and farm produce. According to the June 14 decision, any consignment of rice products unaccompanied by a health certificate and required analytical report shall be re-dispatched to the country of origin or destroyed.

Solar panels, seamless steel tubes and pipes, wine, toluidine and rice products have become the objects of trade frictions between China and the EU in recent months. Could a trade war between the two major trading partners break out?

Zhang Yujing, President of China Chamber of Commerce for the Import and Export of Machinery and Electronic Products, thinks there won't be a trade war between China and the EU. China is the EU's second biggest trading partner behind the United States, and the EU is China's biggest market. In 2012, China exported 290 billion euros worth of products to the EU and the latter sold 144 billion euros worth of goods to China.

With a growing trade volume between the two, disputes are inevitable, experts say. A trade war, however, would be costly for both sides. Analysts say China doesn't want to lose out in its trade with the EU but will call the EU out on its protectionist behavior, which explains the toluidine duties. China calls the latest duty a warning, not a sanction.

European Commissioner for Trade Karel De Gucht seems biased against China: Despite the objections of 14 EU member states, he still decided to impose anti-dumping duties on Chinese solar panels. Karel De Gucht, a Belgian, may have to respond to China's investigations into EU toluidine because China receives most of the chemical from Belgium.

Zhang said that both China and the EU should be sober-minded throughout these trade disputes. The European Commission can decide to collect punitive tariffs up to six months on any product, but beyond that period it must obtain the support of a majority of EU nations. He believes China and the EU can ultimately find the appropriate solutions to settle their growing trade spats.

Email us at: lanxinzhen@bjreview.com

Dumping of EU Toluidine in Chinese Market

- China's imports of toluidine from the EU stood at 4,514.58 tons in 2008, 7,502.42 tons in 2009, 20,201.79 tons in 2010 and 13,589.55 tons in 2011.

- The market share of EU-produced toluidine in China was 7.51 percent in 2008, 11.53 percent in 2009, 24.18 percent in 2010 and 16.07 percent in 2011.

- The number of employees in China's toluidine industry dropped by 1.88 percent in 2009, by 8.9 percent in 2010 and rose by 3.46 percent in 2011.

- The investment returns rate of China's toluidine industry dropped by 0.42 percentage points in 2009, by 0.66 percentage points in 2010 and fell by 4.45 percentage points in the negative in 2011.

(Source: Ministry of Commerce)