Sunday

25th Sep 2016

EU to tweak rules on Chinese 'dumping'

  • Beijing. The EU Commission will come out with the official proposals on the new dumping rules later this year (Photo: Bernd Thaller)

The European Commission has tried to fudge the issue of whether China is a “market economy” amid efforts to protect European industry from cheap exports.

Beijing says that under World Trade Organisation (WTO) rules the EU must grant the market economy status (MES) from December onward - 15 years after China joined the trade club.

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That risks causing an outcry in EU capitals and in industry, especially the steel sector, because the step would make it much harder for the EU to impose tariffs on state-subsidised Chinese goods.

The college of commissioners held an orientation debate on the issue on Wednesday (20 July).

But instead of taking a position either way, it proposed a third solution - to change the way it calculated whether products were being dumped on the EU market at artificially low prices.

“We should forget this phrase [market economy status]”, commission vice-president Jyrki Katainen said at a press conference in Brussels on Wednesday.

He said the EU would “fulfil our [WTO] legal obligation”, without going into further detail.

But he added that “we should change the way we calculate subsidy or dumping cases, so that we don’t become more vulnerable than we are at the moment”.

He said that would entail changing “the calculation method on dumping and subsidy issues".

In current alleged dumping cases, EU investigators compare Chinese export prices to those of other countries, rather than to domestic prices in China.

That would be illegal if the EU grants China the coveted MES.

Under the EU’s proposed new model, dumping investigations would take into account prevailing international prices, and distortions caused by state interventions.

Trade commissioner Cecilia Malmstroem told press this would mean that: “We are not singling out China. This could go for any country. What we are looking for is whether there are any distortions in a country or even in a sector”.

She added that no matter what the WTO deadlines might say, "China is not a market economy … If it were a market economy, it wouldn't have the problems we are seeing”.

Katainen said the commission’s new approach would result in similar duties to those in place today.

Guy Thiran, director general of Eurometaux, an organisation representing the European non-ferrous metals industry, which had been critical of the commission's approach, said Wednesday that it was too early to tell if the new proposal will lead to effective protection.

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