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04/12/2016

EU nears tougher rules on China dumping

Trade & Society

EU nears tougher rules on China dumping

Cecilia MALMSTRÖM, European Commissioner for Trade; Matthias FEKL, Minister for Foreign Trade of France

[European Council]

European Union trade ministers said Friday (11 November) they must not be “naive” in the face of alleged China price dumping, as they tried to agree tougher measures to fight unfairly low prices.

China is the EU’s second-largest trade partner but the two blocs have had a series of disputes over cheap Chinese exports that Europeans say are unfairly flooding their market.

“Europe cannot be naive and must protect its interests especially when it comes to dumping,” said Peter Ziga, trade minister from Slovakia, which holds the EU’s six-month rotating presidency.

However, differences remained at a meeting of the 28 ministers in Brussels, with free-trade purists such as Britain, Sweden and the Netherlands fearing a lurch towards protectionism and angering China.

“There is still not the necessary majority, but we are sure that we can have a decision,” said French Trade Minister Matthias Fekl.

“It is indispensable,” he added.

The most controversial idea — on the table since 2013 — is to soften the “lesser duty rule” by which tariffs are imposed systematically at the lowest possible level.

Changing this rule would allow the EU to impose higher tariffs than now.

Steelmakers are especially keen for the changes after being battered by a collapse in prices due to China-led oversupply and a wave of cheap imports.

China makes more than half the world’s steel and is accused of massive dumping as its own market slows sharply.

About 15,000 steelworkers protested in Brussels on Wednesday demanding the EU pass the tougher rules.

But some countries are worried that tougher rules will make imports too expensive for industry.

“The Swedes are really against it. Volvo needs 10,000 parts to build an auto,” an EU diplomat said on condition of anonymity.

These extra defences are seen as key with China in December widely expected to receive the official World Trade Organization designation of Market Economy Status (MES).

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This new standing means that China’s trade partners will no longer be allowed to use alternative methods to measure potential price dumping, handing much more power to Beijing in trade fights.

To counter this, the European Commission’s proposal introduces several criteria to assess trade partners, such as state policies and influence, the widespread presence of state-owned companies and the independence of the financial sector.

China said it is greatly concerned about the European Union’s protectionist measures against Chinese steel products, the commerce ministry said on Saturday (12 November).

“The Chinese side has expressed great concerns and worries about the EU’s trade protectionist tendency over steel,” the ministry said in a statement on its website.

High duties levied on Chinese products could seriously hurt Chinese companies, the ministry said.

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“China is willing to strengthen exchanges and communication with the European side and properly solve problems that the steel industry is facing,” it said.