22nd Mar 2018

EU seeks to strengthen measures on Chinese dumping

  • The EU is trying to protect itself from massive Chinese steel imports (Photo: Tata Steel Europe)

The European Commission presented new anti-dumping measures on Wednesday (9 November) that are mainly aimed at countering Chinese steel imports.

The commission wants to change the way it calculates dumping when products come from a country where the economy is distorted because of state intervention.

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According to the proposal, the EU will scrap the usual distinction made between countries with a market economy status (MES) and countries which are not recognised as such. It proposes treating all members of the World Trade Organisation (WTO) in the same way.

So the EU will continue to impose anti-dumping duties on products from WTO countries when it is proved that these products enter the EU at dumped prices.

It will also continue to apply the standard rules by which dumping is calculated by comparing the price of an imported product with its domestic price in the exporting country.

But when the state intervenes in a country's domestic market, the EU will also compare the price of a product imported to the EU with its price on another comparable market - the US, for example. Until now that methodology was applied only to non-market economy countries.

This country-neutral system will allow the EU to face Chinese cheap imports independently of the communist-run country's status inside the WTO.

China says it is entitled to get the MES at the end of this year, 15 years after it joined the WTO.

The EU, which has been debating the issue since the start of the year, is wary of recognising China as a market economy, but is obliged to respect WTO rules.

Faced with an influx of Chinese imports that destabilises EU industry, especially in the steel sector, and an anti-trade backlash in public opinion, the commission is trying to find a middle way.

It said in July that the most important issue was not China's status but how the EU can defend itself. The country-neutral system is how it wants to achieve that.

The anti-dumping reform also runs in parallel to a discussion between member states over so-called trade defence instruments, in particular the level of duties on imports, that was revived by EU leaders at their last summit in October to address growing opposition to free trade.

"We need to be able, when needed, to shield our manufacturers from unfair competition," EU trade commissioner Cecilia Malmstroem told journalists on Wednesday.

She said the EU had to find "the right balance between openness and robust trade defence instruments".

China will not be treated as a non-market economy any more, but will still be subject to special investigations when the EU suspects that it trades products under market prices.

"This does not mean today we say that China is a market economy. It clearly isn't," she said.

Specific distortions

The new method "takes into account specific distortions due to state intervention in a country or a sector", Malmstroem explained.

"When a state has such control [on its economy] that the prices and cost of exported goods do not reflect market realities, we will be able to intervene."

China reacted in a lukewarm way to the proposal. It said that it did "not completely nullify [China's] ‘surrogate country’ status, it merely allows the status quo to covertly continue".

European industries were even more critical.

“Instead of improving efficiency and ensuring effectiveness of EU anti-dumping measures, the commission’s new proposal makes European industries even more vulnerable,” said Milan Nitzschke, the spokesman for AEGIS Europe, a federation of 30 manufacturing industries.

He said that the reform "completely abandons" market economy criteria and "substantially weakens the basis for EU anti-dumping measures".

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