LUXEMBOURG -The European Union slapped trade charges on Chinese imports of a widely used food preservative Tuesday for allegedly illegally undercutting European producers.

Antidumping duties of nearly 50 percent will be charged on citric acid imports for six months from Wednesday to give two EU companies a chance to recover from losing market share to imports the EU says the Chinese government partly subsidized.

EU nations will decide later this year on whether to keep the duties for a further five years.

Austria's Jungbunzlauer and Belgium's SA Citrique Belge, owned by Dutch chemicals producer DSM NV, are the only Europe-based producers of the preservative.

EU trade investigators said Chinese imports increased by 37 percent from 2004 and last year charged up to a fifth less than European rivals. Chinese suppliers now have close to half the EU market for citric acid.

"The effect of this unfair pricing behavior of the dumped imports from (China) was that the prices on the (EU) market were suppressed," the EU said in its Official Journal.

The low market price meant Europeans were unable to pass on higher energy costs to consumers that they needed to stay profitable, it said.

Chinese companies find it hard to defend themselves against European claims that they are illegally underselling their products because the EU refuses to recognize China as a market economy.

It says the Chinese state sometimes pays normal business costs such as energy and rent or gives cheap loans.

Associated Press 06.03.08, 1:14 PM ET

Source: www.forbes.com