EU new antidumping, a critical viewpoint

di 🇬🇧 Michelangelo Cocco pubblicato il 14/10/17

As announced on October 12 by the European Parliament official website “Members of the INTA committee confirmed a recent informal agreement with EU ministers on new anti-dumping measures protecting jobs and industry”.

“For the first time worldwide, the EU’s trade defense legislation would take account of international labour and environmental standards, under an informal agreement struck by Parliament’s negotiating team and EU ministers in Strasbourg on 3 October. The EU is currently updating its antidumping law, to counter unfair trade practices by third countries whose states interfere extensively in the economy”.

“In negotiations, MEPs also ensured that there will be no additional burden of proof on EU companies in anti?dumping cases, small and medium sized enterprises will get help to deal with procedures and trade unions may give input to decisions on trade defense measures”.

The informal agreement was approved by 31 votes to 2 with 5 abstentions.

The agreement will now be put to a vote by the full house at the November plenary session in Strasbourg.

Under the new rules, the EU would use the same anti?dumping methodology for all WTO members, and target “significant market distortions”, i.e. where prices are not market-based. Broader plans to update the EU’s “trade defense instruments” with a view to raising tariffs against dumped or subsidised imports are currently being negotiated with EU ministers.

CSCC discussed these latest measures with professor Markus Taube, who is is Professor of East Asian Economic Studies / China at the Mercator School of Management and, as a director, chairs the in-EAST School of Advanced Studies at the University of Duisburg-Essen.

The agreement on new european anti-dumping measures was generally described as a compromise between those countries – like Italy and France – that asked more protections, and Germany, with its stronger relations with China. The so called “compromise” eliminates the distinction between market and non-market economies and gives the European Commission a key role in determining what export countries to target and what European sectors to protect. Don’t you think that with the new norms politics and balance of power inside the EU Commission will prevail?

I see this new agreement from a different angle. China had made the claim that after 15 years of WTO-membership it would automatically get the market-economy status and thereby preferential treatment n all anti-dumping proceedings. As a matter of fact, under these new conditions it would not have been possible to implement any anti-dumping duties on Chinese exports. The EU could not accept this demand, as China does not - by far - meet the criteria going along with this status. Prices in the Chinese economy are seriously distorted and cannot be accepted at face value in the competitive setting of the European markets.

As such both, China and the EU, were heading towards a major diplomatic éclat probably resulting in a new trade war and escalating rounds of "retorsion" measures. The EU's move to give up the differentiation between market and non-market economies was in this contex equal to an diplomatic cutting of the Gordian knot. With the new agreement both sides leave the arena without a loss of face and the European side remains in a position to uphold the - warranted and deerly required - protective measures against distorted price structures in the Chinese economy.

Can the new rules really offer more protections to european sectors and jobs? How?

We will have to wait for the nitty-gritties of actual implementation. But in principle, the new rules can provide for more protection in so far as they allow for taking into account a broader range of market distorting practices in third countries.

How was the agreement greeted in Germany?

German public is not aware of these developments as media coverage is negligible. Concerned political and business circles, however, welcome the new arrangements and especially the way it was accomplished - without serious diplomatic friction.

Investments represent another “hot issue” between EU and China. Do you think theEuropean countries are determined to create a European Committee on Foreign Investments like the US CFIUS?

There certainly will be some new institutional approach to handling inward FDI by the Eurpean Union as some purchases appear to be based on competitive strengths and financial power that is not rooted in actual business performance, but relies on illegitimate governmental support. If the American model is the benchmark to refer to, however, is questionable. But greater regulatory power to overcome the wedge that has broken up between individual business interests (owners lured into selling firms to very well paying Chinese investors) and national, macro-economic interests in the national industry set-up with proprietory technologies and industrial capacities (fear of an "industrial hollowing out" and a sale-off of key technolical expertise) will be a major policy trend in the coming months and years.

China represents EU’s second trade partner while for China the EU is the first. But China is determined to protect its strategic sectors and services while now the EU is studying new ways to protect some of its markets from China’s dumping and some sectors from China’s acquisitions. Do you think this is a trend of the so called “de-globalization” or what?

No. The European Union remains committed to a global division of labour, the more the better. But this comes under one major precondition: a joint commitment to un-distorted markets and fair competition. Protecting and fighting for these principles is not a step towards protectionism and de-globalisation. It is a necessary initiative to strengthen the foundations of the global economy and strive for greater welfare for all partners joining in this global movement.