China gains major win in fastener dispute with EU

The fastener product section at an industry expo in Yiwu, Zhejiang province. [LIU LUNAN / FOR CHINA DAILY]

China scored a major victory in its seven-year trade dispute with the European Union on Monday after the World Trade Organization ruled in favor of Chinese fastener makers.

The EU decision to impose hefty tariffs on fastener imports from China during the past seven years is illegal, the WTO said in its ruling. China, for its part, will take more concrete steps to protect the rights of its domestic exporters, the Ministry of Commerce said.

Chen Fuli, deputy director-general of the department of treaty and law at the ministry, said China would forward a trade retaliation request to the WTO to force the EU to remove the anti-dumping duties on Chinese fasteners if the EU does not negotiate terms or remove such an unfair duty after the ruling.

Normally it takes up to 15 months for countries to amend rules and withdraw anti-dumping duties after a WTO ruling on trade disputes.

China is the world's biggest producer of screws, nuts, bolts and washers, and the EU is a major destination for its fasteners, which are used for a wide range of products from aircraft, high-speed trains, automotive parts to furniture.

China shipped $1 billion worth of fastener products to the EU in 2008 and the same fell to $80 million by 2014 after the EU decided to impose anti-dumping duties of up to 85 percent on China's fasteners for five years in January 2009.

On July 31, 2009, China brought the case to the WTO's dispute settlement mechanism, the country's first such case against the EU.

China currently has more than 8,000 fastener enterprises, including more than 6,000 private businesses, small and medium-sized companies. The industry employs 200,000 people and exported products worth $5.24 billion to global markets such as the United States, Russia, Japan, Germany and Brazil in 2014, according to the National Development and Reform Commission, the top economic planner.

Gu Weiping, general manager of Jiaxing Xiongdi Fastener Co, said the WTO ruling is definitely a major victory for China. "We will be closely watching on how it is implemented by the EU."

Since the Netherlands, Spain, Czech Republic and Italy are still major fastener exporters in the world and are backed by the respective industry associations, trade unions and local governments, Gu said that the EU is "probably unwilling to do so, or may delay the implementation or sometimes only partially implement the WTO ruling".

Jiaxing Xiongdi employs 900 workers in Zhejiang province and exports products to destinations such as Turkey, India and South Korea. Gu said it has already stopped shipping fasteners to markets in Europe like Germany and Slovakia as it had to pay stiff anti-dumping duties. "There was hardly any room to make profits from exports to such destinations," he said.

"We have already given priority to standardizing exports and improving quality to re-enter the EU market, even though the 28-nation bloc may launch a new round of review and investigations of fasteners imported from China," said Gu.