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The WTO's dispute settlement body said that Beijing had hampered EU manufacturers' access to its market and should fall into line.
The WTO aims to ensure a level playing field in commerce among the 158 nations which make up its membership.
Countries are allowed to impose special import duties on goods that fellow members dump on their market at below cost, but must be able to show that the goods harm domestic producers.
The EU turned to the global body in 2011, saying China had failed to show how European-made x-ray security scanners were being dumped.
Under WTO rules, members who fail to fall into line can face retaliatory measures from their wronged trade partners.