Following a broad public consultation, the Commission adopted a proposal to change the EU’s anti-dumping and anti-subsidy legislation on Wednesday 9 November.
The proposal adopted outlines a new method of calculating dumping on imports from countries where there are significant market distortions, or where the state has a pervasive influence on the economy.
The purpose of the proposals is to try and ensure that Europe’s trade defence instruments (TDIs) are able to deal with current realities, such as overcapacities, in the international trading environment, whilst complying fully with the EU’s obligations under the WTO’s legal framework.
The current approach used to calculate dumping is a comparison of the export price of a product to the EU with the domestic prices or costs of the product in the exporting country. This will be kept with the addition of the new methodology alongside it which will be country-neutral. It will apply equally to all WTO members taking into account significant distortions in certain countries due to state influence on the economy. This will overcome the problem of domestic prices and costs not providing a proper basis from which to determine the comparison with the export price. Instead, when such distortions exist, other benchmarks reflecting undistorted costs of production and sale will be used.
The “analogue country” methodology will be reserved for non-market economy countries; WTO members will no longer be subject to this approach. The criteria used to identify distortions include: state policies and influence, the widespread presence of state-owned enterprises, discrimination in favour of domestic companies and the independence of the financial sector.
There will be a transition period where ongoing cases will remain subject to the existing laws but then the new anti-dumping methodology would apply to all cases initiated once the amended rules come into force.
EU Trade Commissioner Cecilia Malmstrom said “the proposal is important because it means that the EU is living up to its WTO commitments”, noting the new method is country neutral and does not grant market economy status to any country, including China.
Beijing has urged Brussels to strictly fulfill its WTO obligation without any additional condition by due time. The Chinese Commerce Ministry earlier cautioned that Brussels’ new anti-dumping rules should not exceed the current standards under the WTO on market distortion, and should not become an excuse for enforcing anti-dumping measures that were against WTO rules. The ministry also expressed hope that Brussels would avoid sending the wrong signals on trade protectionism.
The Parliament and Council will now decide on the proposal through the ordinary legislative procedure which the LSBO will monitor closely and report on when the decision is announced.