As US President Donald Trump prepares to block steel imports from China for reasons of national security, the EU will start fresh talks on the new anti-dumping rules next week (12 July).
The green light given by the European Parliament on Wednesday (5 July) to begin negotiations with national governments has paved the way to discuss new rules on the calculation of import duties and tightening the grip on unfair trade practices, especially by China.
Global overcapacity in the steel sector, which is already putting EU-China relations under strain, risks becoming a flash point between Europe and the United States ahead of this week’s G20 summit, which begins in Hamburg on Friday (7 July).
EU jobs and businesses have been under pressure in recent years due to China’s excess production capacity and subsidised economy, especially in the steel sector.
MEPs have repeatedly urged the European Commission to counter unfair competition from China in a way that complies with WTO rules.
Red lines for negotiation
On Wednesday, the assembly set clear red lines for negotiations with EU ministers and the Commission.
“Anti‑dumping investigations need to take into account the exporting country’s compliance with international labour, fiscal and environmental international standards, potential discriminatory measures against foreign investments, effective company law, property rights and the tax and bankruptcy regime,” said MEPs in the negotiating mandate.
Lawmakers also requested that the EU executive issue a detailed report describing the specific situation in a certain country or sector for which the calculation of duties will be applied.
A matter of methodology
Some industries are concerned that the new methodology proposed by the European Commission, will no longer employ the so-called ‘analogue country’ methodology traditionally used for ‘non market economies’. Instead, it wants a whole new method applicable to any country that better captures state interventions than the current system does.
Italian Forza Italia MEP Salvatore Cicu (EPP), leading the Parliament report on the issue, has tried to reintroduce elements of the old analogue country methodology and pin down the criteria the EU would use in the future to determine dumping, such as effective company laws, bankruptcy regimes and property rights enforcement.
China has already expressed its disapproval and warned the EU to abide by World Trade Organisations rules in conducting anti-dumping investigations against China.
EU industries contend that the current anti-dumping measures in place have made a difference in enabling them to recover and compete in the market, undistorted by unfair trade practices.
The construction sector
Beyond steel, some companies have expressed major concerns regarding the approach being taken by DG Trade in the first expiry review of anti-dumping measures on imports of open mesh fabrics of glass fibres originating in China.
Open mesh fabrics are mainly used as reinforcement materials in the construction sector.
“The European Commission’s position would arbitrarily end the defence of a whole EU industry. To withdraw a measure at the moment it starts to have visible effect against unfair trade is the opposite of reliable trade defence. This is akin to a doctor giving a patient medication for a life-threatening disease, and at the moment it starts to work deciding to take it away, leaving the patient at the mercy of the disease,” said Milan Nitzschke, spokesperson for a coalition of EU industries under the AEGIS alliance banner.
“As the legislation for the new ‘non-standard’ anti-dumping methodology is being negotiated, this is a very important case. In the absence of the clear technical rules proposed by the European Parliament, anti-dumping cases would become much more uncertain and highly political in the future,” added Mr Nitzschke, saying that the Parliament has identified a number of checks and balances that should be included in the EU’s new anti-dumping methodology.