China may seek trade sanctions for the very first time against the European Union, after the World Trade Organization ruled on Monday that EU tariffs imposed on Chinese exports of screws, nuts and bolts were illegal.

The WTO's fourth and final decision on the case comes after a series of appeals spanning seven years. China first brought the case to the world trade body in 2009, after the EU slapped heavy import duties ranging from 26.5 to 85 percent on Chinese screws, nuts, bolts and washers, citing anti-“dumping” rules.

Anti-dumping regulations allow countries to exact high levies on exports with prices set so low that they constitute unfair competition with foreign rivals selling the same products.

But in 2010, the WTO ruled that Brussels did not act appropriately in imposing the levies - a ruling that was upheld on appeal in 2011. One of the WTO's arguments was that the EU imposed anti-dumping duties on all Chinese firms, instead of customizing the tariffs according to the company's practices.

The World Trade Organization said the EU was remiss in applying the punitive tariffs.

The EU said it reduced the tariffs in 2012, but China said Brussels did not do enough to comply with the ruling - an assessment the WTO arbitrators agreed with in a decision from last August.

Economic damages

The EU's final appeal of that ruling was rejected on Monday, but it remained open whether China would seek compensation for the economic damages it said it suffered, which included “more than a hundred thousand jobs," according to a statement from the Chinese Ministry of Commerce.

Chinese exports to the EU plummeted from $1 billion (920 million euros) in 2008 to an average of $200 million after the EU put the punitive tariffs in place, according to Reuters' analysis of data from the International Trade Center, a joint venture of the WTO and the United Nations.

The EU would have to remove the tariffs or risk further action from China, the statement said.

jd/hg (Reuters, AFP)