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Chinese trade threat prompts steel-led EU industry demonstration

[BRUSSELS] European Union industries led by the steel sector mobilized thousands of people for a march in Brussels to warn about job losses from Chinese competition, seeking to persuade EU policy makers to retain a full arsenal of import tariffs.

The demonstration in the heart of the EU quarter on Monday sought to dissuade the bloc from recognizing China as a market economy - a step that would make it more difficult for manufacturers such as ArcelorMittal to win sufficiently high duties on alleged below-cost - or "dumped" - shipments to Europe by Chinese competitors.

As Europe battles sluggish economic growth and high unemployment, the rally tapped into fears that China's export power could wipe out industries and leave hundreds of thousands of people jobless across the 28-nation EU. With the continent also struggling to control a Mideast refugee influx that some say threatens the EU's own existence, the metal industry's central role in the march had symbolic power 65 years after the European Coal and Steel Community's creation foreshadowed the current supranational bloc.

"We aren't competing on a level playing field," Geert Van Poelvoorde, an ArcelorMittal executive and the president of the European Steel Association, told reporters in the EU capital before the demonstration got under way. "Granting market-economy status to China is essentially just giving a license to dump." Duty Rates The demonstration raises the political stakes in the EU's deliberations over whether to recognize China as a market economy - a goal that Beijing is pressing for as a political prize 15 years after the country joined the World Trade Organization and as an economic fillip following the slowest Chinese economic growth in two decades.

Market-economy status for China would ensure the EU uses Chinese data for trade investigations affecting the country. The bloc currently uses other nations' figures to calculate anti- dumping levies against the nation on the grounds that Chinese state intervention artificially lowers domestic prices and makes them an unreliable indicator of a good's "normal value." This practice results in higher EU duty rates against Chinese exporters and - by extension - more protection for European manufacturers.

More than 234,000 jobs in the EU are linked to the production of goods - ranging from electrical steel and solar panels to bicycles and ironing boards - that are protected by existing European anti-dumping duties against China. Of those jobs, 102,600 are in ceramics and 55,000 are in steel, according to the European Commission, the bloc's executive arm.

Monday's demonstration took place between the glassy, star- shaped headquarters of the commission, which is responsible for proposing whether to recognize China as a market economy, and the imposing, marble-clad Brussels seat of the EU's national governments, which will have to decide on the matter (along with the European Parliament).

Impact Study While European Trade Commissioner Cecilia Malmstroem has signaled openness to recognizing China as a market economy, she faced resistance from some colleagues in mid-January when the commission held an initial debate on the subject. It plans another discussion around mid-year.

Meanwhile, the commission is carrying out an in-depth study of the impact on jobs of any EU decision to recognize China as a market economy and scrambling to reassure European manufacturers that it won't shy away from slapping tariffs on imports from the country when they are found to be unfairly priced. On Friday, the commission imposed provisional anti-dumping duties on non- stainless steels from China and threatened levies on three other types of Chinese steel products by opening new dumping probes.

"The commission is ready to open anti-dumping cases and impose measures against unfair imports of steel when the conditions are met," Jyrki Katainen, a commission vice president in charge of jobs and growth, told a European manufacturing conference on Monday in Brussels that was held down the road from the industry demonstration.

BLOOMBERG