Saturday

27th Nov 2021

EU defends new trade rules after Chinese criticism

  • The EU says China is using cheap capital, state-owned companies, chepa land to distort the market (Photo: A bloke called Jerm)

The EU on Thursday (21 December) defended a report on China's market distortion practices saying new European rules against cheap imports did not target any one country.

The EU had, on Wednesday, introduced trade defence rules designed to combat dumping. It also published its first report on state induced market distortions in China, partly to help EU producers who want to lodge complaints.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

China's foreign ministry said on Thursday the EU's conclusions on China's economic development were "thoughtless remarks". It also accused the EU of being hypocritical and said it had "fabricated excuses".

"We urge the EU to strictly respect WTO rules," said foreign ministry spokeswoman Hua Chunying said, referring to the World Trade Organisation.

"Every country enjoys the right to choose its own development path, which should be respected by the international community," said Chinese ministry of commerce spokesperson Gao Feng.

The EU insists the new measures, including the report, are not aimed at China.

"It is a proposal, which is not against any country, it is neutral, the idea is for trade defence instruments be fit for purpose, and fit to meet the challenges that exist globally," a spokesman for the commission told reporters on Thursday.

He added the next commission trade report will focus on Russia.

The commission had earlier argued that China came under scrutiny first because "investigations and measures against China account for the largest proportion of the EU's anti-dumping investigations and trade defence measures".

Alternative ways

In its 466-page report, the commission said that there were "significant distortions" in the Chinese economy.

It said that China influenced heavily the allocation of resources, such as land, capital, and influenced prices "in a very significant manner".

The report is important because the EU has changed the way it handles anti-dumping cases. In cases of "significant market distortions", it can impose anti-dumping tariffs.

The new rules - which have been in the making for over a year - were approved last month.

They were needed to solve the EU problem of China's so-called market economy status.

China said it should have been recognised as a market economy by the end of 2016 in accordance with the pact it entered into when joining the WTO in 2001.

That new status would have changed the criteria for determining what was a "fair price" for exports and would have made it harder for the EU to impose anti-dumping duties on Chinese goods sold at low prices.

But the new EU rules allow to impose anti-dumping duties no matter of the "market economy" label.

Anti-dumping tariffs can be imposed if significant distortions exist, among other thins: state policies, cheap financing, the widespread presence of state-owned businesses, and discrimination against foreign companies.

The commission has to establish the existence of distortion due to state interference through investigations and possible reports - such as the one on China - to apply anti-dumping tariffs.

The standard way of calculating dumping would be to compare export prices with domestic prices or costs in the exporting country.

Dumping would mean selling for export at below domestic prices for all WTO members

If, due to state intervention, domestic prices or costs are distorted, the commission will disregard these when calculating domestic value.

Instead, as an alternative methodology, it will use international benchmarks reflecting an undistorted, fair price for a product.

The report published on Wednesday said the Chinese Communist Party sets and controls all aspects of the economy.

China and the EU have been at odds on trade. With the backdrop of US president Donald Trump's "America first" policy, both trading giants have said they were committed to a multilateral world order, free trade and vowed to fight against protectionism.

However, the EU has said unfair practices towards European companies in China, and steel overcapacity have hurt European interests.

After the US, China is the EU's second biggest trading partner, and the EU is China's largest.

China's 'new era' means balance with EU

Under Xi Jinping's second term as leader, China wants more equality with the US and the EU, while waiting for Europeans to show their global clout.

MEPs tell Chinese ambassador of concerns on trade

In an exchange with the new Chinese ambassador to the EU - his first appearance at an EU institution - the EU Parliament international trade committee called for action to meet commitments to open up China's market and reduce overcapacity.

News in Brief

  1. Covid variant: EU to block travel from southern Africa
  2. France and UK seek EU help on Channel migrants
  3. New Swedish PM who resigned after 7 hours gets second chance
  4. Belgium to decide on Friday on Covid measures
  5. UK rings alarm on new Covid strain in South Africa
  6. Turkish police use tear gas at women's rights march
  7. Poland calls for more Nato troops
  8. Ex-Navalny aide leaves Russia

Stakeholders' Highlights

  1. Nordic Council of MinistersNew report reveals bad environmental habits
  2. Nordic Council of MinistersImproving the integration of young refugees
  3. Nordic Council of MinistersNATO Secretary General guest at the Session of the Nordic Council
  4. Nordic Council of MinistersCan you love whoever you want in care homes?
  5. Nordic Council of MinistersNineteen demands by Nordic young people to save biodiversity
  6. Nordic Council of MinistersSustainable public procurement is an effective way to achieve global goals

Latest News

  1. Belgium goes into three-week 'lockdown light'
  2. MEPs list crimes of 'Kremlin proxy' mercenaries
  3. EU to open up 'black box' of political ads
  4. Can the ECB solve climate change and inflation on its own?
  5. EU set to limit vaccine certificate to nine months
  6. Surprise coalition in Romania without former Renew's Ciolos
  7. This 'Black Friday' is a turning point in corporate accountability
  8. West struggling to show strength on Ukraine

Join EUobserver

Support quality EU news

Join us