(GENEVA) - The European Union on Monday lodged a complaint with the World Trade Organisation over Chinese restrictions on foreign financial news providers working in the country, trade sources said.

The dispute has been brewing since September 2006, when China renewed the monopoly held by state news agency Xinhua, which precludes foreign providers of financial information services from dealing directly with Chinese clients.

China has come under criticism from Canada, the EU, Japan and the United States for its restrictions on foreign news agencies such as Bloomberg and Reuters.

"Xinhua is both a competitor of European financial services information providers and their Chinese regulator," an EU Commission source told AFP last month.

"This creates a situation that is unfair and puts foreign suppliers at a disadvantage," the source said.

The Financial Times reported on Monday that trade officials from the United States were also expected to send a letter to Beijing later in the day requesting talks on the matter.

The move follows a visit by EU Trade Commissioner Peter Mandelson at a time of rising tensions between Brussels and Beijing over a range of trade issues.

As Europe's trade deficit with China soars to record levels, Europeans frequently accuse Beijing of creating an uneven playing field by obstructing EU imports and keeping down the value of the yuan to the benefit of Chinese exports.

Europe ran a trade deficit with China in 2006 -- the last year for which there is data -- worth 131 billion euros (194 billion dollars) with Chinese exports to the EU growing about 27 percent per year for the last five years, according to the commission.

The EU also recently launched investigations to see if China was unfairly selling steel, cables and candles to Europe at below cost in what is know as dumping and which can lead to retaliatory tariffs.

Mandelson himself has come under fire from some member states over his negotiating tactics, which have been criticised for allowing China too much leeway.

Last week, his colleagues in the European Commission voted in favour of imposing anti-dumping tariffs against China over air compressors despite his recommendation not to do so.

The air compressor case has limited economic importance for the European Union as only Italy is concerned with a seven percent share of the worldwide market.

"But it's a question of principle for EU anti-dumping policy and Mandelson suffered a heavy defeat," an EU official said on condition of anonymity.

Mandelson has frequently clashed with his German, French and Italian colleagues at the commission over anti-dumping cases, arguing that the benefits of such measures should not exceed their costs to European producers and consumers.

03 March 2008, 13:17 CET

Source: www.eubusiness.com