Cool heads will prevail over trade war: EU official

Bloc's ambassador to China says only small share of exports involved in anti-subsidy, anti-dumping cases

The European Union will not enter into a trade war with China, the EU ambassador to the country said on Wednesday.

Markus Ederer, EU ambassador to China, said the EU and China will start negotiating this year over an investment treaty focusing on market access, investment protection and ensuring the equal treatment of enterprises.

His statement came a day after the Ministry of Commerce contended that an anti-subsidy investigation the European Commission has conducted into Chinese organic coated steel is unreasonable and will damage the interests of Chinese exporters.

The China Iron & Steel Association said the European Commission recently alleged that makers of the steel have received "illegal" subsidies from the government. To protect EU enterprises, the commission is considering imposing anti-subsidy duties at a rate of up to around 50 percent on Chinese steel exporters, The Financial Times reported.

On Tuesday, Shen Danyang, spokesman for the Ministry of Commerce, called on the EU to rescind its conclusion and cancel its investigation.

"There is a lack of evidence showing Chinese enterprises are dumping (in the EU) or receiving subsidies," Shen said.

Ederer said the EU doesn't want to see the potential trade war that is brewing become a reality. He said the bloc's investigations of Chinese products are not directed against China.

"Enterprises under EU investigations also include those from the United States and other trading partners," Ederer said at a press conference.

"The proportion of trade disputes between the EU and China is actually very small and both sides should obey WTO regulations when dealing with trade problems," Ederer said, adding that the Chinese-made products involved in anti-dumping or anti-subsidy cases make up less than 1 percent of China's exports to the EU.

Last year, Sino-EU trade decreased by 3.7 percent from 2011 to $546.04 billion, data from the General Administration of Customs show.

China's exports to the EU reached $333.99 billion in 2012, a decline of 6.2 percent year-on-year. That decrease contributed to the United States surpassing the EU that year to become China's largest export destination, receiving $351.79 billion worth of the country's exports, a figure up 8.4 percent year-on-year.

The EU decided to initiate an anti-dumping investigation into imported Chinese solar panels in September and an anti-subsidies investigation in November.

"Final rulings in those cases are to be released in the first half of the year," Ederer said.

Nearly 60 percent of China's solar exports went to the EU in 2011, Reuters reported, and Europe was home to 74 percent of global solar installations, it said.

Ederer also said the EU welcomes Chinese investments into both European financial and fixed assets this year.