Brussels, 20/07/2016 (Agence Europe) - On Wednesday 20 July, European Commission Vice-President for Jobs, Growth, Investment and Competitiveness Jyrki Katainen told press that to settle the thorny issue of how to treat China in EU anti-dumping investigations once certain provisions in China's protocol of accession to the WTO have expired in December 2016, the Commission is working on a robust solution on both the legal and economic levels, which excludes the EU granting China market economy status (MES).
This solution, which will be translated into a legislative proposal promised for the autumn, is based on three main lines - respecting the EU's obligations at the WTO; a new methodology for anti-dumping calculations and a strengthening of the EU's trade defence system; and an across-the-board dialogue with Beijing to settle the issue of industrial overcapacity - Katainen stated.
“The issue is rather how to adapt the EU legislation to the expiry of some provisions of China's accession protocol to the WTO. This is a legal fact and we are a Union of law. We want to maintain our international openness and we want to be also in the future in favour of freer and fairer trade. At the same time, it is clear that we are not naïve. We know that the world does not always play by our rules. That is why the discussion whether the EU grants MES to China or not is irrelevant. We will not grant MES to China. But we will fulfil our international commitments. We [the Commission] have worked intensively to find a solution that is legally robust and economically responsible. We are converged to find a solution that is better than the status quo because it is legally sustainable”, Katainen stated, after the second debate at the college of commissioners in 2016 on this thorny issue.
The solution on which the Commission has been working is based on a new methodology for the calculation of anti-dumping margins “which would take account of market distortions inseparable from state interference in a given country or in a given sector”, European Commissioner for Trade Cecilia Malmström said, stating that there was “no automatic nature to granting China MES”. This new methodology will be a “neutral instrument” applying to all WTO countries, with no list of countries being considered as non-market economies. “As a result, we will not particularly mark China out. We will be able to do it for any country and we will examine if there are distortions in a particular country or sector, and will do it without discrimination”, she said.
At the same time, this new methodology “should enable the EU to arrive at the same level of anti-dumping rights as today”, Malmström promised. The proposal will include a transitional period during which all measures in place and ongoing investigations will be maintained under the precedence clause, she added. In addition, the Commission will propose strengthening anti-subsidy regulation so that any new subsidy updated during the investigation may be taken into account in the calculation of the final duty imposed, Malmström stated.
Alongside this, the Commission is working on strengthening the EU's trade defence instruments, on which its proposal put forward in April 2013 remains bogged down at the Council. “We are trying to find a compromise with the member states. Our procedures can be quick, stricter. We are coming closer to the American trade defence model. We propose shortening the length of investigations from 9 to 7 months. And in certain cases, we could even suspend the 'lesser duty rule' to reduce the harm”, Katainen said.
Katainen added that the Commission is also focusing on the dialogue with China to deal with the root problem of industrial overcapacity in steel and other sectors where problems are also starting to arise. For this, it will depend especially on the joint working group on steel. An agreement was made to establish this group at the EU-China summit on 12-13 July (EUROPE 11593).
In a broader context, Katainen called on the governments of the EU member states “to show the citizens that trade can remain fair and give good economic results in an international system based on rules that ensure equal conditions”. “99% of trade with China is not the subject of unfair practice and produces big benefits. Intelligent and sustainable instruments are needed to deal with the remaining 1%”, he added, before concluding: “all the trade agreements that we want to conclude will help create jobs. Thanks to trade agreements €1 billion in exports from the EU to third countries will create 14,000 new jobs”. (Original version in French by Emmanuel Hagry)