The European Union (EU) has started its first safeguard investigation on China, following the United States and India.

But EU officials emphasized the investigation on the prepared or preserved mandarin orange was open to a friendly solution with the Chinese authorities.

Isabel Ramallo, press officer of the EU Commission delegation in China, confirmed yesterday the EU has begun a nine-month safeguard investigation into Chinese tinned oranges.

The investigation was filed by Spanish firms, which complained about a surge of imports of tinned orange from China and a drop in the sales of local producers.

The EU will give the decision whether the concerned Chinese imports disrupt or threaten to disrupt EU markets and whether to increase its tariff or impose import quotas.

"We have informed the related departments in China before the investigation, and we are open to a friendly solution with China,'' Ramallo said.

Before the EU safeguard investigation, the United States and India started safeguard investigation on Chinese products.

Under the terms of China's accession to the World Trade Organization (WTO) in December 2001, WTO members may impose specific safeguard measures -- increased tarrif or quotas on Chinese goods if the importing country determines that such shipments from China disrupt or threaten to disrupt the market.

The safeguard measures imposed by the United States on the imports of certain steel products from eight countries, including China, have been concluded as inconsistent with the WTO Safeguards Agreement and GATT 1994 by WTO reports on July 11.

US firms are also moving to seek safeguard measures on Chinese textiles.

The US Committee for the Implementation of Textile Agreements under the US Department of Commerce published procedures regarding safeguard measures on Chinese textiles in May, notwithstanding the strong opposition from China.

The procedures laid out the legal basis for the United States to impose safeguards against textile and apparel products of Chinese origin on which the United States has agreed to lift quota limitations.

The US action has triggered strong resentment from the Chinese textile industry.

Chinese textile exports to the United States were valued at US$7.07 billion last year, surging by 15 per cent.

The export value of prepared or preserved mandarin to the EU reached 30 million euros (US$34.4 million) last year. It is small compared with 81 billion euros, the total Chinese export value to the EU last year.

There is a healthy growth in the two-way trade between China and EU, said Franz Jessen, minister-counselor of the Delegation of the European Commission in China.

According to Chinese statistics, Chinese exports to the EU increased by 48.6 per cent during January to May this year, and imports from EU also grew by 38.2 per cent.

"The high growth rates are very impressive as the world economy is gloomy,'' Jessen said.

He expected China will replace Switzerland as EU's second biggest trading partner in about two years, coming after the United States.

China already replaced Japan as the third biggest trading partner of the EU last year.

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