China mulling WTO case over India toy ban - paper

An Indian man looks at a Chinese-made toy helicopter at a market in New Delhi, March 31, 2001.

BEIJING (Reuters) - China may ask the World Trade Organisation (WTO) to investigate a six-month import ban slapped on its toys last month by India, the official China Daily reported on Wednesday, citing a source close to the matter.

Worries about protectionism are rising as the impact of the global financial crisis spreads, increasing the temptation for governments to bring in measures that will help their firms in the short-term but worsen the overall economic pain.

India last month banned imports of several types of toys from China for six months "in the public interest," without giving any further details of why.

The Toy Association of India's president, Raj Kumar, said India had likely taken the step in the interest of the economy and consumer safety.

The Chinese government will proably ask the global trade regulator to look into whether the move violates its laws, the state-owned paper said, quoting a source who asked not to be named.

China's manufacturing industry -- a key supplier of toys, apparel and food to much of the world -- has faced a wave of complaints in recent years, most recently as thousands of people have fallen ill as a result of consuming milk powder tainted with melamine, a chemical used to make plastics.

The world's leading toymaker Mattel recalled over 21 million Chinese-made toys worldwide in 2007 due to excessive levels of lead paint and other unsafe components.

But the Chinese report quoted a trade lawyer saying that the Indian policy was an illegal and protectionist.

"The ban cannot hold water. The Indian side is doomed to lose in the court if the Chinese government appealed to the WTO Dispute Settlement Body," said Fu Donghui, managing director of Allbright Law Firm Beijing, which deals with WTO-related cases.

Beijing had already said last month that it was "strongly dissatisfied" with the European Union's imposition of duties on its screws and fasteners, which it said had obvious protectionist intentions and harmed the rights of Chinese manufacturers.