* Trade chief says proposal would allow more Commission-initiated cases
* Would ease companies fears in cases against China
* Proposal would be the biggest modernisation in almost 20 years
The European Union's trade chief Karel De Gucht asked for broad new trade powers on Wednesday to make it easier to launch anti-dumping cases, particularly against China.
Although the proposed rules do not mention China by name, EU officials said they were designed to give the EU more leverage against the country and to ease companies' fears of retaliation in cases involving the powerful Asian economy.
"It would be naive to say we've not been inspired in our thinking by our experience of dealing with investigations which are in China. The bulk of our cases, 80 percent or something, concern imports from China," an EU official said.
De Gucht told Reuters the proposal to demand companies hand over sensitive data to prove some foreign products are sold below cost in Europe will allow regulators more freedom to start a trade investigation on their own initiative, known as "ex officio", without needing a complaint from affected industry.
"By compelling companies to answer our questionnaires it would also help normalise ex officio - and that is not unintentional," he said.
Fear of Chinese officials hitting back at European industries that assist with investigations featured in an anti-dumping probe on Chinese solar panels.
Concerns of possible retaliation have also prevented the launch of a case against telecom equipment makers Huawei and ZTE, sources familiar with the case said.
Asked whether the proposed new rule to compel companies to provide data supporting trade cases would give them enough cover to cooperate in a telecoms case, De Gucht told Reuters: "The fact that you would make it a normal procedure would certainly go further than is currently the case."
TRADE LAWYERS SCEPTICAL
The proposal, which must be approved by EU governments and the European Parliament before becoming law, would strengthen the Commission's ability to scrutinise trade issues without needing businesses to come forward.
It would also bring trade defence powers closer to the Commission's robust antitrust unit, one of the most powerful enforcers globally, due in large part to its ability to force companies under investigation to hand over data within a fixed time limit.
But Brussels trade lawyers were sceptical of the proposal's abilities to shield companies from revenge.
"Everybody is going to guess that even before the initiation (of a case), the local industry to some extent participated and cooperated...so what retaliation are you preventing? If you have a telecoms case with only three operators, then it's easy to retaliate against everybody," a Brussels trade lawyer said.
The proposal would also remove a limit on the size of duties that could be placed on countries found to distort access to their raw materials like rare earth minerals, which could result in significantly higher duties for countries like China.
China has come under fire for restricting access to its rare earth minerals, which are crucial for the defence, electronics and renewable-energy industries, and are also used in smart phones, disk drives and wind turbines.
Last year, the United States, the European Union, and Japan launched a WTO complaint against China on this issue.