Trade row looms with China over duty on bags

Europe looks set for a fresh trade war with China over plans by Brussels to impose a duty on imported plastic bags. Under a proposal which is likely to be agreed by member states this month, a duty of 10 per cent would be imposed on bags from China and Thailand.

News of the plans, which will overshadow a meeting between the EU trade commissioner, Peter Mandelson, and China's commerce minister today, offset a partial victory for retailers over Brussels' regime of tariffs on shoes.

Retailers said that the duty would cut profit margins and increase the pressure for rises in shelf prices or job cuts.

Alisdair Gray, European director of the British Retail Consortium, said: "It is a direct tax on retailers. In the end, whether the bags are paid for or given away, they will have to pass the cost on to customers." He said that it would cost the big four supermarkets, which import 10 billion bags a year, £55m.