* China seeks WTO talks on EU duties for screws, bolts-sources * Beijing questions legality of EU duties of up to 85 pct * If talks fail, China could request costly WTO panel * EU says duties are not protectionist
(Adds reaction, more details)
By Darren Ennis
BRUSSELS, July 17 (Reuters) - China will challenge at the World Trade Organisation anti-dumping duties on Chinese-made screws and bolts imposed by the European Union in January, sources with knowledge of the case said on Friday.
"Mofcom (China's commerce ministry) is going to seek WTO dispute settlement consultations in the EU fastener case over the legal process used by Brussels," one source told Reuters.
If the consultations fail, Beijing could request a panel to hear the case, leading to lengthy and costly litigation. Initial consultations normally last around 60 days.
It would be the first case taken by China against the EU at the global trade watchdog.
The import duties, of up to 85 percent, target as many as 200 Chinese companies selling components widely used for cars, white goods and machinery in the EU worth some 575 million euros ($811 million) a year. [ID:nLV207690]
Chinese manufacturers had asked Beijing to take the EU to the WTO, arguing Brussels was protecting European companies amid the worst global economic slowdown in 80 years.
"I think China is absolutely right to take this step," said Robert MacLean, a partner at law firm Crowell & Moring who represented a large portion of the Chinese industry in the EU probe.
"These kinds of dubious decisions, where it is clear that no injury is being suffered by European industry as a result of Chinese imports, must be properly scrutinised under the WTO microscope and the necessary corrections made.
"Only this kind of action can stop the European Commission converting EU anti-dumping and trade policy into protectionism in the way that was done in this investigation," he added.
RISING TENSIONS
The European Commission, which oversees trade policy in the 27-nation bloc, denies being protectionist.
European producers accuse China of giving its own steel companies an unfair advantage by restricting exports of raw materials and driving down their domestic costs, and subsidising Chinese manufacturers.
International rules allow countries to impose extra duties on goods that are "dumped" -- imported at prices below what is paid in their home market -- if the dumping injures businesses in the importing country.
Beijing has denied distorting competition.
The Jiaxing Association of Iron and Steel Fastener
Companies, representing some 20 percent of fastener exports, was
unhappy that two Chinese units of two European firms -- Italy's
Agrati and Celo
Trade disputes between Brussels and Beijing have been on the rise since the EU's trade deficit with China ballooned, hitting 160 billion euros last year.
EU exports to China rose to 78 billion euros in 2008 from 26 billion euros in 2000, while imports from China jumped to 248 billion euros from 75 billion euros over the same period.
The EU has imposed additional tariffs on Chinese imports ranging from shoes to steel products. The EU also launched action with the United States last month at the WTO over Chinese export restrictions on a raft of key industrial raw materials. [ID:nLN887624] (Editing by Dale Hudson)