Monday

22nd Jan 2018

Focus

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.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

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.

Analysis

Macron's Chinese 'game of influence'

On his recent visit to China, the French president tried to take advantage of Beijing's 'divide and rule' EU approach and become the country's main interlocutor with Europe - while also calling for more EU coordination.

Supported by

News in Brief

  1. Belgium lowers terror alert level
  2. France, Spain set to gain seats in post-Brexit EU parliament
  3. Orban family probed over 'fraudulent' EU projects
  4. Spanish judge rejects Puigdemont arrest warrant
  5. Austria plans to sue Commission over Hungary's nuclear plant
  6. Puigdemont proposed as sole candidate for Catalan leadership
  7. Abbas in Brussels to discuss Palestinian state recognition
  8. Exiled Catalan leader leaves Belgium for first time

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic Solutions for Sustainable Cities: New Grants Awarded for Branding Projects
  2. Mission of China to the EUTrade Between China, Belt and Road Countries up 15%
  3. Nordic Council of MinistersOresund Inspires Other EU Border Regions to Work Together to Generate Growth
  4. Mission of China to the EUTrade Between China, Belt and Road Countries up 15%
  5. AJC Transatlantic InstituteAJC Calls on EU to Sanction Iran’s Revolutionary Guards, Expel Ambassadors
  6. Dialogue PlatformRoundtable on "Political Islam, Civil Islam and The West" 31 January
  7. ILGA EuropeFreedom of Movement and Same-Sex Couples in Romania – Case Update!
  8. EU2017EEEstonia Completes First EU Presidency, Introduced New Topics to the Agenda
  9. Bio-Based IndustriesLeading the Transition Towards a Post-Petroleum Society
  10. ACCAWelcomes the Start of the New Bulgarian Presidency
  11. Mission of China to the EUPremier Li and President Tusk Stress Importance of Ties at ASEM Summit
  12. EU2017EEVAT on Electronic Commerce: New Rules Adopted

Latest News

  1. MEPs may bar killer robots and drones from EU research cash
  2. Europe's social democrats are having a hard time
  3. How Oettinger's CO2 permit sale could fill Brexit blackhole
  4. New Polish foreign minister tries to charm EU commission
  5. Middle East, Messi and missing MEPs on agenda This WEEK
  6. Instagram and Google Plus join EU anti-hate speech drive
  7. EU wants 'entrepreneurship' in education systems
  8. UK loses EU satellite centre to Spain

Stakeholders' Highlights

  1. European Jewish CongressChair of EU Parliament Working Group on Antisemitism Condemns Wave of Attacks
  2. Counter BalanceA New Study Challenges the Infrastructure Mega Corridors Agenda
  3. Dialogue PlatformThe Gülen Community: Who to Believe - Politicians or Actions?" by Thomas Michel
  4. Plastics Recyclers Europe65% Plastics Recycling Rate Attainable by 2025 New Study Shows
  5. European Heart NetworkCommissioner Andriukaitis' Address to EHN on the Occasion of Its 25th Anniversary
  6. ACCACFOs Risk Losing Relevance If They Do Not Embrace Technology
  7. UNICEFMake the Digital World Safer for Children & Increase Access for the Most Disadvantaged
  8. European Jewish CongressWelcomes Recognition of Jerusalem as the Capital of Israel and Calls on EU States to Follow Suit
  9. Mission of China to the EUChina and EU Boost Innovation Cooperation Under Horizon 2020
  10. European Gaming & Betting AssociationJuncker’s "Political" Commission Leaves Gambling Reforms to the Court
  11. AJC Transatlantic InstituteAJC Applauds U.S. Recognition of Jerusalem as Israel’s Capital City
  12. EU2017EEEU Telecom Ministers Reached an Agreement on the 5G Roadmap