Chinese exporters warned on Monday that a possible decision made by the European Union (EU) to imposeanti-dumping duties on Chinese-made fasteners will hurt both sides and may fuel tensions between the two trading powers.

Both sides lose

"The duties will not only deny Chinese exporters the access to the EU market, but also increase costs for European industries which rely on those products and in the end make European consumers pay," said Zhang Feng, deputy secretary-general of the Jiaxing Association of Fastener Import and Export Companies, a Chinese exporters lobby which leads a legal fight on the case.

Following one year's investigation, the European Commission proposed early this month to impose anti-dumping duties of between 63 and 87 percent on Chinese fasteners over the next five years and the EU member states are due to make a formal decision on this Wednesday.

The measure will cover up to 200 fasteners imported from China such as screws and bolts widely used for cars, large household appliances and machinery in the EU.

The value of the imports reached 575 million euros (US$736 million) last year, which makes it one of the biggest EU anti-dumping cases against China.

For Chinese exporters, stakes are high since the duties may mean they will be squeezed out of the European market, which accounts for one third of their total exports, resulting in a loss of thousands of jobs.

It is estimated that there are around 10,000 fastener producers and trading companies in China which employ 2.5 million workers.

"If there will be this high anti-dumping duty, around 800,000 workers will lose their jobs," Zhang said.

Although European fastener producers will make more profit thanks to rising prices on the EU market, it will be European users and consumers who pay for it, Zhang said.

If the duties of between 63 and 87 percent are imposed, European users and consumers will have to pay an extra 402 million euros (US$515 million) on average annually, according to Zhang.

"Amid the financial crisis, this will increase dramatically the cost of downstream users and put the whole European industry in a worse position," Zhang said.

Legally flawed, economically wrong

Robert MacLean, a trading partner at the law firm Crowell & Moring in Brussels who represents Chinese exporters, said the expected decision to impose the anti-dumping duties will be both legally flawed and economically wrong.

"I think what is missing is injury. European industry has not shown any injury," he said. "We think this decision is more politically motivated than technically motivated."

Chinese exporters had argued that as their products sold to Europe are standard fasteners mainly for general industrial use and DIY markets and are different from European ones which are of high strength and are mainly for car industry, earth-moving industry and airplanes, there should be no serious damage to the European industry, a key requirement to impose the anti-dumping duties.

"Chinese fasteners and European fasteners are complementary with each other. They do not compete directly in the market," the association said in a statement.