"The (EU executive) Commission has at its disposal sufficient prima facie evidence that the anti-dumping measures on imports of the product concerned are being circumvented by means of the transhipment via Malaysia," the EU said in its regulatory register.
If Malaysian operators are found to be smuggling Chinese screws to Europe -- knowingly or not -- Malaysian exports could face EU import duties of up to 85 percent, until 2014.
EU moves to bolster the defences for its 4 billion euro ($5.5 billion) fasteners market have been under way for several months, with the Commission and anti-fraud officials collecting evidence of illegal of Chinese shipments.
The investigation is the latest in a string of trade protection measures the EU has brought against Asian exporters in recent months.
European producers watched for years as fierce competition from China closed factories making screws and bolts to sectors from the car industry to hardware and do-it-yourself shops.
In 2009, a complaint that Chinese exporters were using illegal pricing to crush their European competitors -- lodged by the European Industrial Fasteners Institute -- led the 27-nation bloc to impose steep import tariffs on the Chinese goods.
Since then, Malaysian export data has shown ballooning sales of fasteners to the EU.
In the year that the EU boosted duties on Chinese fasteners, Malaysia's exports of such products nearly tripled to 32,700 tonnes from 13,700 tonnes in 2008, EU statistics show.
The boom continued this year, with Malaysia supplying more than 20,000 tonnes -- over 10 percent of Europe's demand -- in the first three months of the year. In 2008, Malaysia's market share in the EU had been less than 1 percent.
At the same time, China's sales of fasteners to Europe plummeted by 80 percent, and rose more than five-fold to Malaysia, according to an internal EU document seen by Reuters. (Reuters)
