EU Corporatism/Corporate Welfare: Fork Handles

Oh dear, here we see the EU being used as a tool of vested interests. Free trade my painted arse! Not content to bow to the request of Osram in slapping a levy on Chinese CFL bulbs, we now have candles next in line.

BRUSSELS, Oct 21 (Reuters) - In its first protectionist move since the credit crunch, the EU is set to impose anti-dumping duties on imports of Chinese candles this week, angering retailers and churches before their lucrative Christmas period.

EU diplomats and industry sources close to the matter said on Tuesday that Brussels' trade officials would impose tariffs of between 20 and 30 percent -- a day after the EU's new trade chief warned against a protectionist response to the current financial turmoil.

'They (European Commission) are going ahead with the extra tariffs on Chinese candles ... on Wednesday,' one diplomat told Reuters. An industry source added that the extra duties would range between 20 and 30 percent.

The tariffs will come into effect from Nov. 15 for six months. A Commission spokesman declined to comment.

The decision is not yet final since the Commission, the EU's executive arm, must make a definitive proposal following a full investigation within six months, which is then voted on by the bloc's 27 governments.

In February, Brussels launched a probe after candlemakers from Germany, the Netherlands and other countries complained that they were being hurt by illegal pricing practised by Chinese rivals and accused them of getting unfair export aid.

The Commission's initial investigation was due to be presented to national trade officials at a regular anti-dumping meeting on Wednesday. But the Commission, which oversees EU trade policy, removed it from the agenda, industry sources said.

'They didn't want a repeat of the embarrassing shoe vote,' another diplomat said, referring to the Commission's decision to extend duties on imports of Asian footwear despite opposition from the majority of EU countries at a meeting last month.

PARAFFIN MAFIA

In 2006, Chinese imports accounted for around 270 million euros ($357.6 million) of the overall EU candle market, worth 810 million euros, and also more than 90 percent of the bloc's candle imports.

Major European retailers and consumer groups have attacked the proposed tariffs, saying they will cost jobs and penalise consumers, notably ahead of a peak festive period. Diplomats said churches, notably Christian ones which use a huge amount of candles, were also unhappy with the move.

The British Retail Consortium, representing companies such as Tesco(nasdaq: TESO - news - people ), John Lewis, and Swedish furniture maker Ikea, blamed high raw material costs in the EU as the real cause of damage to Europe's candle industry.

'All this will do is hinder European retailers, hit the consumer in the pocket and inevitably this type of protectionism will cost jobs in the long run,' a BRC spokesman said.

Ikea cited last month's fine of 676 million euros handed down by the Commission to nine petrochemicals companies for a 'paraffin mafia' to fix prices as a major contributing factor.

'There is no EU manufacturing of hand-made and decorative candles because it is not a competitive market. A candle is made from around 70 percent paraffin,' an IKEA spokesman said.

(Reporting by Darren Ennis, editing by Jon Boyle) ($1=.7550 Euro) Keywords: EU CHINA/CANDLES

tf.TFN-Europe_newsdesk@thomsonreuters.com

Our costs will rise because those who can lobby the EU now have their cosy world fenced off.