Brussels, 10/05/2016 (Agence Europe) - During a plenary debate, in Strasbourg on Tuesday 10 May, on granting market economy status (MES) to China and the calculation of the anti-dumping margin on unfairly-traded Chinese products, the leaders of the main political groups called on the Council to take the process of modernising the trade defence instruments, which were launched in April 2013, off ice.
China is not a market economy according to the five criteria of the EU, most of the MEPs stressed during a debate with the Council and the Commission on how the EU should tackle Chinese unfair competition from 11 December this year - the expiry date for various provisions of China's accession protocol to the WTO providing for changes in how it is treated (non-market economy or market economy) in the EU's trade defence investigations.
The MEPs therefore called upon the Commission to present, as soon as possible, its assessment of the impact on European industry and employment of the three options on the table and of new proposals to fight Chinese dumping, which are compatible with the EU's commitments with regard to the WTO.
There are three options on the table: - treat China as a non-market economy, at the risk of being exposed to proceedings at the WTO and Chinese trade reprisals; - remove China from the list of non-market economies unconditionally, at the risk of exposing EU industry to fierce Chinese competition, with no safety net; - remove China from the list of non-market economies, but introducing attenuation measures by ramping up the EU's anti-dumping arsenal.
“It is undeniable that China is not a market economy, whatever standards you apply. The Commission is therefore working on a new approach for an anti-dumping methodology, the calculations for which would reflect distortions in the Chinese economy more precisely. It will include a solid trade defence system and will ensure compliance with the WTO rules”, said Commissioner for Health and Food Safety Vytenis Andriukaitis, indicating that this approach could be aligned on that of the United States, calculating the dumping margins on a case-by-case basis. The College of Commissioners will debate this approach “before the summer break”, once the impact assessment has been finalised, he pledged.
Given the crisis in the European steel sector, which has fallen victim to Chinese overcapacity, and Chinese unfair competition in many state-supported industrial sectors, the MEPs also urge the Council finally to agree on the proposed modernisation of the trade defence instruments, tabled by the Commission in April 2013 and on ice at the Council since December 2014 (see EUROPE 11202), whereas the European Parliament took position in April 2014 (see EUROPE 11063).
The chair of the committee on international trade, German MEP Bernd Lange (S&D), said that the Council was primarily responsible, having blocked the modernisation of the trade defence instruments. “We need fast and flexible instruments. And the Commission must propose alternative anti-dumping calculation methods” to tackle Chinese unfair trade, he stressed.
A cross-party coalition of 35 MEPs, mainly from the S&D, EFDD and Greens/EFA groups, but also including EPP, ALDE and GUE/NGL members, led by the heads of the MES Action group - Edouard Martin (S&D) and Emmanuel Maurel (S&D), both French, and Italy's David Borrelli (EFDD) - calls on the Dutch Presidency on Tuesday to “find a mutually acceptable compromise” on the reform of the trade defence instruments at the Council, particularly as regards the introduction of limited derogations to the lesser duty rule, in order to give the Commission the freedom to impose corrective duties up to the total amount of the dumping margin in certain very specific cases.
“The lesser duty rule is a unilateral 'WTO +' commitment that our main trading partners, such as the United States, do not apply. This leads to further damaging market distortions, as the divergences between the EU and US regimes is leading to important trade diversion. Introducing exemptions (which would be temporary) to this rule would not transform the EU into a protectionist zone. It would make trade fairer and help create a level playing field for our industry”, they stress.
In a position paper published by the French daily newspaper La Tribune, some 20 MEPs from the EPP group, led by Italy's Antonio Tajani and French MEPs Alain Lamassoure, Frank Proust and Tokia Saïfi, acknowledged that it is currently “impossible” to give China its market economy status as it does not meet the five criteria of a market economy laid down by the EU, and in view of the risk to millions of jobs in Europe. They are calling for a “pragmatic” approach to China, calling for the revision of the EU's trade defence instruments and the creation of an “additional tax” on Chinese dumping products, to create a fund to support European businesses, allowing them to ride out the “predictable” tit-for-tat measures likely to be taken by China if it is not awarded market economy status. (Original version in French by Emmanuel Hagry)