UPDATE 1-EU wins trade row with China, wants immediate action

Tue Feb 26, 2013 12:37pm EST

* China imposed duties on EU's X-ray scanners in 2011

* Brussels wants immediate removal of import duties (Recasts; updates with background about the case)

By Tom Miles and Robin Emmott

GENEVA/BRUSSELS, Feb 26 (Reuters) - The World Trade Organisation has backed the European Union's challenge to Chinese duties on X-ray scanners and Brussels demanded they be removed immediately, saying it would not accept tit-for-tat trade retaliation from Beijing.

China imposed duties of the security scanners from Europe in 2011 after Brussels imposed tariffs on Chinese cargo scanners in 2010, a response the European Union said was purely retaliatory and broke global trade rules.

A WTO panel sided with the EU, according to a report published on Tuesday, saying China's decision to impose duties was not based on an objective examination.

China's Commerce Ministry said in a statement that it would assess the judgment and reserved the right to appeal.

"I expect China to remove the measures immediately," EU Trade Commissioner Karel De Gucht said in a statement following the WTO ruling in Geneva. "I will not accept tit-for-tat retaliation against European companies through the misuse of trade defence instruments."

The case highlights the tensions between two of the world's largest trading partners, who are balancing a need to protect local markets from competition while avoiding a trade war in which both sides hit the other with damaging tariffs.

The EU also needs China to buy its products and help it emerge from the aftermath of the euro zone debt crisis, but is concerned that Beijing is using state financing to allow Chinese companies to produce goods that will compete with Europe, ranging from telecoms equipment to solar panels.

In the X-ray scanners case, the EU said Chinese imports tariffs effectively closed the Chinese market to European security inspection equipment and were unjustified.

The EU brought its case to the WTO in July 2011, the first time Brussels has challenged a Chinese trade defence measures before a WTO panel. Since then China's anti-dumping duties have been the target of several other WTO disputes, including duties on U.S. cars and chickens, and Japanese stainless steel tubes.

The latest ruling follows another defeat for China's anti-dumping policy. In October last year it was found to have broken the rules by slapping punitive dumping duties on a type of U.S. speciality steel. (Additional reporting by Zhang Wei in Beijing; Editing by Alison Williams)

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