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Brussels - A plan giving Brussels new powers to fight unfair Chinese exports "is dead", Italy said on Friday, with the European Union ideologically split over how to deal with countries that dump cheap goods in Europe.
Following rows over Chinese goods ranging from telecoms to solar panels, the European Commission, the EU executive, proposed rules in 2013 to make it easier to penalise exporters that sell goods at below production costs.
But Italy, which chaired a trade ministers' meeting in Brussels, made plain that deep divisions prevailed. Countries such as France say Europe must defend its industries, while free-trade advocates like Sweden see the rules as protectionism.
"It's dead," Carlo Calenda, Italy's top trade official, told reporters. "There is a clear ideological fracture. Half of the states think this is a protectionist measure," he said.
Although the proposed rules did not mention China by name, EU officials said they were designed to allow the European Commission, which handles trade issues for EU governments, to start anti-dumping investigations without an industry complaint.
In one long-running case, fear of retaliation in China stopped European telecoms companies calling for an investigation into accusations that rivals Huawei and ZTE benefited from Chinese subsidies to grow rapidly in Europe.
Both companies deny any wrongdoing and the European Commission has now dropped any threat of an investigation.
More than two-thirds of Europe's so-called trade defence cases are with China, the EU's second-largest trade partner that is seeking to compete with the sophisticated goods that Europe produces, including solar panels and mobile networks.
While the proposed anti-dumping powers have backing in the Commission and the European Parliament, they need to be approved by European Union governments.
The original plan was to bring trade defence powers closer to the Commission's anti-trust unit, one of the most world's powerful enforcers of competition policy that has taken on major corporations suspected of wrongdoing in Europe.
New European Trade Commissioner Cecilia Malmstrom finds herself in a difficult position because as a pro-trade Swede she must also defend the Commission's proposal.
EU lawmakers also support modernising the EU's trade powers, which remain unchanged since 1995 and currently have an impact on less than 1% of imports into the 28-member bloc.
"No one denies that there are divisions," Malmstrom said. "But the European Parliament wants us to move. The Commission will try to find compromises."
