On Tuesday 3 October, the negotiators from the Estonian Presidency of the EU Council, from the European Parliament (led by Italian EPP MEP Salvatore Cicu) and from the European Commission concluded an agreement in principle on the new methodology for calculating EU anti-dumping duties. This calculation aims to respond to the unfair trade practices of third countries, headed by China, in which there is considerable state interference in the economy.
The EU's new anti-dumping methodology is especially aimed at addressing the issue of how to treat China in EU anti-dumping investigations now that the arrangements on this in China's WTO accession protocol have expired (in December 2016) (see EUROPE 11780).
The new methodology, proposed by the Commission and amended by the European Parliament and Council negotiators, for calculating the anti-dumping margins for imports from third countries in cases of significant market distortions or general state influence on the economy is based on neutrally formulated rules (with regard to the country) and in full compliance with the EU's obligations within the framework of the WTO.
The agreement in principle that was concluded on Tuesday includes changes that strengthen the EU's anti-subsidy legislation so that, in future cases, any new subsidy revealed in the course of an investigation can be examined and included in the definitive duties imposed.
The new rules also guarantee a period of transition during which all the anti-dumping measures currently in force and the investigations under way will be subject to the existing legislation.
To determine the distortions, several criteria will be taken into account, such as the policies and influence of the state, the general presence of state enterprises, the discrimination in favour of national enterprises and the lack of independence of the financial sector.
The Commission will be able to draft reports for the countries or sectors in which it identifies distortions, and the elements of proof garnered from these reports will be available for future investigations. When it lodges a complaint, the industry will be able to use the Commission reports as a basis for putting its arguments about the country where the distortions exist.
During the discussions, the European Parliament negotiators ensured – in line with the mandate granted them by the international trade committee (see EUROPE 11812) – that the new EU rules for the anti-dumping calculation take account of the exporting country's respect of international standards on the environment and labour, and do not impose any additional burden of proof on companies compared with the current procedure for requesting the Commission to launch an anti-dumping investigation.
The MEPs also obtained that: - SMEs be helped in addressing the procedures; - the Commission publish a detailed report describing the specific circumstances in the exporting countries, while focusing on the 'substantial distortions' of prices and costs, with clear indications on the significance of the distortions; - all the parties involved, especially the unions, might contribute to the decisions on the trade defence measures.
These new rules will only apply to anti-dumping investigations opened after the legislation comes into force, following approval of the informal agreement by the European Parliament and the Council. The first stage of the process will be to put the agreement to a vote in the international trade committee on 12 October, then it will put to the European Parliament as a whole at its plenary session in November.
“We won’t stand by idly when our market is flooded by products made with unfair trading practices and with many jobs under threat. Every country can benefit from free and fair global trade, but all have to play by the same rules. That is definitely not the case if exporters work in a state-owned system. I am confident that the new method for dealing with countries with significant distortions of the economy will protect our citizens from the harms of globalisation”, commented Cicu.
“We have ensured that our industries can defend themselves against unfair trading practices, now and in the future. We have ensured that EU companies will not face impossible obstacles in defending themselves against dumping, against tough opposition. As the champions of a rules-based trading order, the WTO-compatibility of our rules was the basis for all discussions”, stated Bernd Lange (S&D, Germany), who chairs the international trade committee.
“We have been successful on our main demands: placing the burden of proof on the Chinese operators; a broader definition of dumping taking account of wage distortions; guarantees of the existence and the quality of a detailed report describing the state of the distortions in China, a taking of account – which can yet be improved – of environmental dumping”, said Emmanuel Maurel (France), shadow rapporteur for the S&D Group.
“These changes will enable Europe’s trade defence instruments to deal with current realities – notably overcapacities – in the international trading environment, while fully respecting the EU’s international obligations in the framework of the World Trade Organisation (WTO)”, commented the Commission.
“Europe stands for open and fair trade, but as I have said time and again, we are not naïve free traders. That’s why we have to make sure that, while upholding the multilateral, rules-based trade system, our legislation allows us to ensure that our companies operate on a level playing field. This is not about any country in particular, simply about making sure that we have the means to take action against unfair competition and the dumping of products in the EU market that leads to the destruction of jobs”, said Commission President Jean-Claude Juncker.
“We believe that the changes agreed today to the legislation strengthen EU's trade defence instruments and will ensure that our European industry will be well equipped to deal with the unfair competition they face from dumped and subsidised imports now and in the future. Having a new methodology in place for calculating dumping on imports from countries which have significant distortions in their economies is essential to address the realities of today's international trading environment”, stated Trade Commissioner Cecilia Malmström.
Alongside the discussions on the EU’s new anti-dumping methodology, tough inter-institutional negotiations on plans tabled by the Commission in 2013 for updating trade defence instruments are continuing. (Original version in French by Emmanuel Hagry)