On the eve of the European Council which will discuss EU trade policy in these times of public hostility over seemingly unfettered free-trade negotiations (in particular with the United States) and unfair Chinese competition which is harming employment in Europe, the Commission tried on Wednesday 19 October to get itself off the hook by implicitly urging those countries that support free trade and which have been blocking its proposal on updating trade defence instruments since 2013 to back its efforts that will allow it to operate better.
In its communication, "Towards a robust trade policy for the EU in the interest of jobs and growth", the Commission begins by reaffirming the benefits of an open free-trade policy: 30 million jobs in Europe are directly linked to exports, a figure that has increased by 65% since 2000, Commission Vice-President Jyrki Katainen highlighted on Wednesday.
The Commission emphasised, above all, its recent efforts to broker a compromise on its proposal to update EU trade defence instruments tabled in April 2013 (see EUROPE 10824) but held at a standstill ever since by a group of roughly a dozen dyed in the wool supporters of free trade, including the United Kingdom, Ireland, Sweden, Denmark, the Czech Republic, Malta and Cyprus.
These countries will not be moved on a key element of the proposal: derogations to the lesser duty rule that would allow the EU to impose much higher customs duties than the current rules permit (see EUROPE 11570).
As things stand, average EU anti-dumping duty on comparable goods exported by China, such as some cold-rolled steel flat products, is 21.1% while in the United States, where the lesser duty rule applies, the average anti-dumping duty is 265.8%, the Commission states.
Although its 2013 proposal limits the lesser duty rule to well defined circumstances – such as cases where there is massive overcapacity and/or raw material distortions, the Council has so far not been able to reach agreement, it regrets.
In addition, the Commission notes that its 2013 proposal seeks to provide the trade defence armoury with more transparent and swifter procedures and that, in March of this year, as part of its strategy for the steel sector, it brought forward further ideas on how to shorten trade defence investigations by two months and on how to change the present methodology for calculating the target profit.
The Commission then went on to state that it is discussing the idea, suggested in July, of a new methodology for calculating the anti-dumping duties in its treatment of China in EU anti-dumping investigations after certain provisions of that country’s protocol of accession to the WTO expire in December 2016 (see EUROPE 11598).
This solution, which the Commission promises to propose before the end of 2016 excludes the EU’s granting of market economy status (MES) to China but seeks to “ensure that the EU’s trade defence instruments are adapted to face the new challenges and legal and economic realities, while maintaining an equivalent level of protection”, it says.
The new calculation methodology would apply on imports from countries where there are market distortions, or where the state has a pervasive influence on the economy. Implementation would include a transition period during which all existing anti-dumping and anti-subsidy measures would remain subject to the existing legislation, and ongoing investigations would not be affected.
The Commission will also propose a further strengthening of the EU anti-subsidy legislation so that, in future cases, any new subsidies revealed in the course of an investigation can also be investigated and included in the final duties imposed.
“Trade is essential for our economic growth and job creation, but we should not be naïve. Our current rules are proving insufficient to combat the harm from unfair foreign competition. Some EU industries have lost thousands of jobs. We cannot stay idle. The EU’s trade defence rules require an urgent update”, said Commission President Jean-Claude Juncker in a press release.
“The Commission has been doing its part, deploying trade defence instruments to their full force. But we have reached the limit of what is feasible under the existing legislation. We put forward measures that would significantly improve our room for manoeuvre. It’s now high time for member states to make the necessary decisions and equip the Commission with instruments fit to deal with the current realities of the international trading environment”, he argued. (Original version in French by Emmanuel Hagry)