The European Union has agreed new powers to apply higher tariffs and more rapidly as part of a wave of measures to face the long-term challenge of cheap imports from China.
The political agreement was reached late on Tuesday (5 December) by negotiators from the European Parliament, the 28 member states and the European Commission, the EU’s executive arm that handles trade matters in Europe.
Four years in the making, the compromise text will allow the EU to swiftly impose higher tariff penalties on imports manufactured at below cost, in line with methodology already used in the United States.
“Better late than never. It took us some time to get here, but today’s deal means that the EU will have the necessary tools to tackle quickly and effectively unjust trading practices,” said EU Trade Commissioner Cecilia Malmström.
The new rule will also shorten the current nine-month investigation period for the imposition of provisional measures to seven or eight months, the commission said.
Importing companies will “also benefit from an early warning system that will help them adapt in case duties are imposed,” it said.
The introduction of such sanctions constitutes a cultural change for Brussels, whose anti-dumping duties were historically set at a level to only remove the injury to EU producers, rather than a higher rate required to bring the import price to what is deemed fair and normal.
The European Union was the only region in the world to apply this so-called “lesser duty” trade rule, which aims at sanctioning dumping practices only minimally.
However, the agreement concluded by the Europeans only removes the application of this rule in cases involving raw materials.
Economically liberal countries, especially in the north of Europe, are hostile to the total elimination of the “lesser duty rule”, which they fear would bring a boost to protectionism.
The deal comes just weeks after the EU pushed through other measure targeting China.
Those measures were intended to offset the consequences of granting China so-called market economy status at the WTO that will make it more difficult to prove and punish illegal trade practices by Beijing.