Not Worth A Candle

Last year light bulbs; this year candles. Either way it is cheap Chinese imports upsetting European producers — and Europe’s retailers that the producers are upset.

Hard on the heel’s of China’s first loss in a WTO complaint, brought jointly by the U.S., Canada and the E. U. over auto parts, E.U. trade commissioner Peter Mandelson is expected to recommend within days pursuing a complaint from candlemakers that a surge in imports is unfairly damaging their businesses. Seven companies, primarily from German and the Netherlands, representing a third of E.U. production, complained to the European Commission in January that they were being damaged by illegal pricing by Chinese rivals, accusing them of getting unfair export aid, according to Reuters.

Chinese imports accounted for €280m of the €835m market in 2006, and comprised more than 90% of all imports, according to Commission figures. Chinese candles have doubled their market share since 2001. Beijing has denied the allegations of dumping.

The dispute upsets European retailers, who say their profits would suffer as they have nowhere else to buy supplies. “You can only buy the quantity needed from China,” Alisdair Gray, of the British Retail Consortium in Brussels, representing UK shops, told the FT. “We would be stuck. We are bracing ourselves for a rash of such cases.”

Last year Mandelson attempted to update antidumping rules for the era of global supply chains, but backed off in the face of fierce opposition. It is fight that needs to be fought if there isn’t to be an endless succession of these anti-dumping cases.

Peeved Peter, Icy Yi

Peter Mandelson, the E.U.’s Trade Commissioner, touched a couple of raw nerves in his speech at the opening of a two-day international food-safety forum in Beijing on Monday: product safety and counterfeiting, saying that China, can’t solve the problems of the former without dealing with the latter first.

Mandelson said about half of the 1,000 product safety violations registered last year by the E.U.’s monitoring system were for non-food products made in China, a number that looks set to rise by 50% this year. Eight out of 10 fake products — including medicines — seized at Europe’s borders are made in Chin, he says.

He also brushed aside China’s progress on product safety issues, saying “Some Chinese officials pointed out that less than 1% of China’s exports to Europe had alleged health risks. But Europe imports half a billion euros worth of goods from China every day, so even 1% is not acceptable”.

Mandelson’s words got any icy reception from Vice Premier Wu Yi, who is heading up China’s task force on product safety and declared hereself “dissatisfied” by the speech.

Mandelson is known for not mincing his words but his speech reflects the frustration in Brussels over the E.U.’s growing range of issues with China beyond product safety, including a ballooning trade deficit, restrictions on access to the Chinese market for European firms and the slow pace of revaluation of the yuan against the euro.

With the regular China-E.U. meeting due to be held in Beijing on Wednesday, the tone is starting to sound a lot like the discussions between China and the U.S. — by no means a wholesome turn of events.