EU to change trade defence rules in response to China

[July 20, 2016]  By Philip Blenkinsop

BRUSSELS (Reuters) - The European Commission on Wednesday proposed a new way of assessing whether Chinese companies are exporting at unfairly low prices, as China demands it no longer to be treated as a special case.

The European Union has been debating whether to grant China "market economy status" (MES) from December, which Beijing says is its right 15 years after joining the World Trade Organization.

In cases of alleged dumping, EU trade investigators currently compare Chinese export prices to those of a third country, such as the United States, rather than to domestic prices. Beijing says this is discriminatory and, in any case, will breach WTO rules from Dec. 11, marking its 15 years in the organisation.

European Commissioners from the 28 EU members discussed three options: do nothing, simply grant China MES or adopt a new approach.

Commission Vice-President Jyrki Katainen and Trade Commissioner Cecilia Malmstrom told a news conference that the commissioners favoured the third option, setting aside the issue of whether or not China is a market economy, while still abiding by WTO rules.

"China is not a market economy. We are not granting it market economy status. If it were a market economy, it wouldn't have the problems we are seeing," Malmstrom said.

The European Union has 59 sets of measures in place to counter dumping or subsidies on products coming from China, ranging from aluminium foil to wire rod. Of 34 ongoing investigations, 22 concern China, the most notable related to different grades of steel.

Malmstrom said establishing cases of dumping would take into account prevailing international prices.

Jyrki Katainen, EU Commission vice-president for jobs, growth, investment and competitiveness, poses at an event in Hong Kong, China July 14, 2016. REUTERS/Bobby Yip

"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 ... This is the new proposal," she said.

Katainen said the new approach would lead to duties very similar to those in place today. He also advocated speeding up the time it takes for anti-dumping tariffs to apply - to seven from the current nine months.

The Commission will make a formal proposal to EU member states and to the European Parliament later this year.

(Additional reporting by Ines Kagubare; Editing by Robert-Jan Bartunek and Robin Pomeroy)

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