Saturday

23rd Mar 2019

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.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join 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.

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.

News in Brief

  1. EU leaders at summit demand more effort on disinformation
  2. Report: Corbyn to meet May on Monday for Brexit talks
  3. Petition against Brexit attracts 2.4m signatures
  4. Study: Brexit to cost EU citizens up to €40bn annually
  5. NGOs demand France halt Saudi arm sales
  6. Report: Germany against EU net-zero emissions target
  7. Former top EU official takes job at law firm
  8. Draft text of EU summit has Brexit extension until 22 May

Stakeholder

An open China brings opportunities to Europe

Some 60 years ago, the first major World Fair after World War II was held in Brussels. Sixty years on, China International Import Expo (CIIE), the first world expo dedicated to expanding imports, will open in Shanghai, China.

Supported by

Stakeholders' Highlights

  1. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  2. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  3. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  4. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  5. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  6. Nordic Council of MinistersNordic commitment to driving global gender equality
  7. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  8. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  9. Nordic Council of MinistersNordic talks on parental leave at the UN
  10. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  11. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  12. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID

Latest News

  1. Italy takes China's new Silk Road to the heart of Europe
  2. What EU leaders agreed on climate - and what they mean
  3. Copyright and (another) new Brexit vote This WEEK
  4. EU avoids Brexit crash, sets new date for 12 April
  5. Campaigning commissioners blur the lines
  6. Slovakia puts squeeze on free press ahead of election
  7. EPP suspends Orban's Fidesz party
  8. Macron is confusing rigidity with strength

Stakeholders' Highlights

  1. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership
  2. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson
  3. Platform for Peace and JusticeTurkey suffering from the lack of the rule of law
  4. UNESDASoft Drinks Europe welcomes Tim Brett as its new president
  5. Nordic Council of MinistersNordic ministers take the lead in combatting climate change
  6. Counter BalanceEuropean Parliament takes incoherent steps on climate in future EU investments
  7. International Partnership For Human RightsKyrgyz authorities have to immediately release human rights defender Azimjon Askarov
  8. Nordic Council of MinistersSeminar on disability and user involvement
  9. Nordic Council of MinistersInternational appetite for Nordic food policies
  10. Nordic Council of MinistersNew Nordic Innovation House in Hong Kong
  11. Nordic Council of MinistersNordic Region has chance to become world leader when it comes to start-ups
  12. Nordic Council of MinistersTheresa May: “We will not be turning our backs on the Nordic region”

Join EUobserver

Support quality EU news

Join us