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EU and US to take China to WTO over financial news

Latest update : 2008-03-03

The EU and the USA plan to launch a case against China at the World Trade Organisation over what they regard as unfair treatment of financial information providers.

GENEVA — The EU and US plan to launch formal proceedings at the World Trade Organization over an attempt by China to put the financial information businesses of international news providers under the control of state-run Xinhua news agency, the Financial Times said Monday.

The paper said trade officials from the EU and United States were expected to send letters to their Chinese counterparts later in the day requesting talks on regulations issued by Xinhua at the end of 2006.

Trade sources said that the European Union on Monday have lodged a complaint with the World Trade Organisation over the restrictions.

Xinhua has long had regulatory control over foreign news agencies' services to local media customers, as part of China's broad system of government news control, and this will not be affected by the WTO action, the paper said.

However, Xinhua's 2006 rules also barred agencies that sell financial information to non-media customers from direct contact with their Chinese clients, in effect requiring them to work through an arm of Xinhua, it said.

"The US has made it clear to the Chinese government for a long time that this issue is of concern to us," the newspaper quoted Sean Spicer of the US trade representative's office as saying.

It added that a Chinese climbdown or WTO victory on the Xinhua rules could help EU and US trade officials mollify domestic critics who say they were not doing enough to counter allegedly unfair Chinese trade and currency policies.

Beijing-based EU and US diplomats approached by AFP Monday did not immediately comment on the report.

The dispute has been brewing since September 2006, when China renewed the monopoly held by state news agency Xinhua, which precludes foreign providers of financial information services from dealing directly with Chinese clients.

China has come under criticism from Canada, the EU, Japan and the United States for its restrictions on foreign news agencies such as Bloomberg and Reuters.

"Xinhua is both a competitor of European financial services information providers and their Chinese regulator," an EU Commission source told AFP last month.

"This creates a situation that is unfair and puts foreign suppliers at a disadvantage," the source said.

The EU move follows a visit by Trade Commissioner Peter Mandelson at a time of rising tensions between Brussels and Beijing over a range of trade issues.

As Europe's trade deficit with China soars to record levels, Europeans frequently accuse Beijing of creating an uneven playing field by obstructing EU imports and keeping down the value of the yuan to the benefit of Chinese exports.

Europe ran a trade deficit with China in 2006 — the last year for which there is data — worth 131 billion euros (194 US billion dollars) with Chinese exports to the EU growing about 27% per year for the last five years, according to the commission.

The EU also recently launched investigations to see if China was unfairly selling steel, cables and candles to Europe at below cost in what is know as dumping and which can lead to retaliatory tariffs.

Mandelson himself has come under fire from some member states over his negotiating tactics, which have been criticised for allowing China too much leeway.

Last week, his colleagues in the European Commission voted in favour of imposing anti-dumping tariffs against China over air compressors despite his recommendation not to do so.

The air compressor case has limited economic importance for the European Union as only Italy is concerned with a è% share of the worldwide market.

"But it's a question of principle for EU anti-dumping policy and Mandelson suffered a heavy defeat," an EU official said on condition of anonymity.

Mandelson has frequently clashed with his German, French and Italian colleagues at the commission over anti-dumping cases, arguing that the benefits of such measures should not exceed their costs to European producers and consumers.

Date created : 2008-03-03