* Proposal could lead to punitive duties on more Chinese goods
* Could give bloc more leverage over China on trade disputes, rare earth minerals
By Ethan Bilby
BRUSSELS, April 9 (Reuters) - EU trade regulators want to expand the scope of their powers to go after companies in anti-dumping investigations, according to EU documents obtained by Reuters.
The proposal, if approved by EU governments and EU lawmakers, would make it legally easier for the European Commission to demand companies hand over sensitive data to prove that some foreign products are sold at below cost in Europe.
It could also result in the EU trade authority levying punitive duties on more Chinese goods and at the same time increase its leverage over China and other countries in trade disputes.
"EU producers are often reluctant to lodge a complaint or may withdraw from an investigation and thus be prevented from exercising their rights under EU and World Trade Organisation law," one of the EU papers said.
It said one in three companies, which took part in a Commission survey, said they had been subjected to foreign retaliation for going to regulators with their grievances.
"A more offensive approach against threats of retaliation, fraudulent or structurally distortive trade practices will strengthen our system and contribute to keeping production and employment in the EU," the document said.
People familiar with the issue said that the proposals by EU trade chief Karel de Gucht were designed to increase the Commission's leverage over China. De Gucht has accused China of subsidising "nearly everything".
The draft would allow the European Union to impose significantly higher duties on countries such as China which restrict access to key raw materials.
"It's clearly trying to respond to a trend which is driven by China," an EU diplomat said.
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 iPhones, disk drives and wind turbines.
Last year, the United States, European Union, and Japan launched a WTO complaint against China on this issue.
The proposed rules would also redefine the way the EU decides whether to open new trade cases based on the region's interest, a sticking point the last time reform was attempted in 2007.
Then trade commissioner Peter Mandelson abandoned his reform effort because of a split between countries with large import sectors that rely on cheap materials and countries with their own low-cost factories in Europe. (Reporting By Ethan Bilby, Editing by Foo Yun Chee and Nick Zieminski)