The EU threatens to impose extra import duties on Chinese products

Karel De Gucht, Member of the European Commission in charge of Trade, gave a press conference yesterday on the proposal that aims at adapting the EU's rulebook to tackle unfair competition from dumped and subsidised imports to the contemporary challenges facing the EU's economy. (EC Audiovisual Services).

Karel De Gucht, Member of the European Commission in charge of Trade, gave a press conference yesterday on the proposal that aims at adapting the EU’s rulebook to tackle unfair competition from dumped and subsidised imports to the contemporary challenges facing the EU’s economy. (EC Audiovisual Services).

The powerful EU’s executive arm, the European Commission, announced yesterday its proposal for a new legislation targeted at strengthening the protection of home businesses and products from external competition. It’s a clear effort to help the Union’s economy overcome a deepening recession. The new legislations will be in force early in 2014, after being approved by the Parliament and the Council.

The Commission powers apart from drafting and proposing any trade legislation include monitoring and application of these instruments. The EC’s mandate also comprises the follow-up and the enforcement of all those measures along with the negotiations of future international rules with EU’s trading partners. In short the Commission is about to undertake single-handed a ground-breaking reform of the Union’s international trade relations. The question is if such a huge bet can be wan. Let’s follow the facts.

Targeting China

There are two indications however, apart the fact that China is the largest exporter to the EU, that this strengthening of the European defences against international competition, is aimed mainly against Beijing. Let’s start from the most crucial points set to change under this initiative. According to yesterday’s announcement the new legislation will permit to the European Union to apply the “Choice of an ‘analogue country’, which is used to determine existence of dumping for products coming from a country without “market economy status”.

In plain English this means the EU will be able to substantiate its allegations, that a foreign producer uses price dumping practices or that receives state subsidies, by using this instrument of the ‘analogue country’. In this procedure the Commission will find a producer from ‘an analogue country’ selling similar products at a higher price than the targeted and under investigation seller originating from a country “without market economy status”. Theoretically the difference between the two prices will be the allegedly dumping or state aid margin.

China, despite having jointed the World Trade Organisation for more than eleven years now is still a country without market economy status recognition. As a result the European Union will consider itself legitimised, according to the World Trade Organisation rules, to impose an extra import duty on products coming from a no market economy, which is be China, because its products are being sold at prices lower than the selling prices of similar products coming from an ‘analogue country’.

Understandably the extra import levy to be imposed on products coming from this no market economy producer will be so high as to equalise the selling prices of those goods with the selling prices of the analogue country producer. In any case the comparison between the ‘analogue country’ producer’s higher selling price with the ‘no market economy’ producer’s lower price, will establish the alleged dumping or state subsidy margin.

There is however another indication that the products to be targeted by the new EU legislation will be of Chinese origin. According to the Press release issued by the EU Commission yesterday: home “Producers will also benefit from higher levels of protection in certain circumstances where the EU proposes not to apply its usual ‘lesser duty rule’. The EU would now use its right under WTO law to impose additional duties that are equal to the dumping/subsidy margin and not only sufficient to remove the injury caused to the Union industry, as it currently does. Increasing subsidisation of imports as well as the manipulation of raw material supplies and prices by exporting countries would be covered by this proposal”.

This last reform will permit to the European Union to actually punish the producers of ‘no market economies’. The idea is that once the Commission has established the dumping or the state subsidy margin, the duty to be imposed will cover not only the alleged unfair completion damage suffered by the home producer of the same product but the EU will be able to impose a duty equal to the entire dumping/subsidy margin established as above.

La raison d’État

Apart from all that, the EU under the new legislation will use ‘The Union interest test’. This means the Commission will be able to determine whether a trade defence measure would serve the overall economic interests in the EU – including interests of the domestic industry concerned, importers, industries that use the imported product and, where relevant, consumers. In reality this close will give the Commission the powers to arbitrarily impose a trade defence measure of any kind, without explaining the reasons. It’s like “La raison d’État” prevailing in the EU’s international trade.

It is interesting noting the Commission insistence that, “The proposed changes would make the EU trade defence work better for all stakeholders, including both EU producers and importers. Anti-dumping and anti-subsidy instruments will be more efficient and better enforced to shield EU producers from unfair practices of foreign firms and from any risk of retaliation”.

What about retaliation?

Is it possible that those people in the European Commission truly believe the new tools to protect the EU markets and producers will pass unanswered? Are they forgetting in Brussels, that Beijing just imposed extra duties on European and American products? The European Sting wrote on January 28 this year: “Last week the Chinese Ministry of Commerce announced the imposition of anti-dumping duties on two products originating from the EU and the US. Imports into China of the widely used solvents ethylene glycol monobutyl and diethylene glycol monobutyl ethers, produced by a number of European and American companies, will be penalised with anti-dumping duties ranging from 9.3% to 18.8%. This is obviously a reaction to the recent anti-dumping investigations and measures introduced by the EU and the US against very important Chinese products and companies”.

Solar panels and Huawei

Currently the European Union is at odds with China on two very important issues. Firstly the Commission has until June to decide, if the EU will impose punitive import duties on Chinese solar panels imports. Secondly Europe has also to decide if it will open an investigation against Huawei Technologies Co. and ZTE Corporation for allegedly using dumping practices. Both those international companies are of Chinese origin. The European Sting has covered very extensively those issues.

All in all, if the Commission wants to follow the opinion of those in Europe who want to alienate Europe from China then the Old Continent must be ready to face the certain to follow retaliation measures from the other side. In this respect Brussels know very well that Beijing doesn’t use time-consuming procedures to impose reciprocal measures, let alone start a trade war.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

EU labour mobility: Inconvenient truths for everybody

Afghanistan: UN ‘unequivocally condemns’ attack in Kabul

South Korea once recycled 2% of its food waste. Now it recycles 95%

MEPs propose measures to combat mobbing and sexual harassment

Europe faces economic turmoil as Italy gets closer to the Excessive Debt Procedure

Latvian economy is thriving, but boosting productivity, improving social protection and transitioning to a low-carbon productive model are vital for sustainable and inclusive growth

The five stages of the Chief Digital Officer – and why they often fail

Unanswered questions for Europe’s youth in President Juncker’s State of Union

The AI moment: preparing for the revolution

These countries are best at attracting and nurturing talented workers

Are medical students with equal access to the medical profession?

Confronting neo-mercantilism: why regulation is critical to global trade

These dogs can smell tree disease – and could help save the world’s orange groves

In the future, no one should be excluded from healthcare

This Dutch butcher makes plants taste just like meat

How drones can manage the food supply chain and tell you if what you eat is sustainable

Coronavirus: Pandemic alert should be trigger for countries to do more against COVID-19

New EU rules to boost crowdfunding platforms and protect investors

Brazilian officer a ‘stellar example’ of why more women are needed in UN peacekeeping

LUX prize will be awarded jointly by the European Parliament and the European Film Academy

China’s impact as a global investor; the Sting reports live from World Economic Forum 2015 in Davos

The next talent opportunity for the digital workplace? Neurodiversity

Why and how did ISIS and Muslim fundamentalism gain momentum this year?

UN Security Council hails ‘courage’ of Afghan voters

The historic accomplishment of a seamless EU patent and intellectual property space

The need to resume preventive policies for chronic noncommunicable diseases

Drugs cost too much. There is a better way to fund medical innovation

UN chief calls for ‘solidarity, compassion and action’ on World Refugee Day

6 ways China and the United States could jumpstart trade reforms

Canada has the most comprehensive and elaborate migration system, but some challenges remain

Republic of Korea President proposes DMZ as future ‘peace and cooperation district’ on Peninsula

Russia is ready for its Phase 3 evaluation once it fulfills high-priority recommendation

MEPs strongly welcome the Global Compact on Migration

Shanghai has tough new recycling rules – and it will stop collecting trash from communities that don’t comply

Key Brazilian border crossing for Venezuela refugees reopens as asylum numbers pass last year’s total

The UN supports Europe’s military action in Libya and the Mediterranean; Russia and China agree

Rights experts call for greater protection of indigenous people during migration

Following the World Cup? Then you’re watching high-performing migrants at work

Can collective action cure what’s ailing our food systems?

Here are five things to know about the future of being human

COVID-19 is widening the education gap. This is how we can stop it

‘You can and should do more’ to include people with disabilities, wheelchair-bound Syrian advocate tells Security Council in searing speech

Human trafficking, slavery reports and health of migrants in Libya

Cyclone Idai: emergency getting ‘bigger by the hour’, warns UN food agency

Commission steps up fight against money laundering and terrorist financing

Nearly 3 billion people around the globe under COVID-19 lockdowns – Today’s coronavirus updates

Commission hardens its stance against carmakers ensuring emissions reductions targets

Is it just visa-free travel that Erdogan demands from the EU to not break the migration deal?

Here’s how innovation could help car companies hit by COVID-19

Rule of Law: European Commission refers Poland to the Court of Justice to protect judges from political control

Warmer months ahead for many parts of the planet: UN weather agency

Greenhouse gas levels in atmosphere break another record, UN report shows

The EU Commission to fight unemployment tsunami with a…scoreboard

The Sahel is engulfed by violence. Climate change, food insecurity and extremists are largely to blame

International Women’s Day 2019: more equality, but change is too slow

Sudan: ‘Violence must stop’, says UNICEF chief, ‘gravely concerned’ over 19 child deaths since military backlash

New neighbours: Could Venus really be home to alien life?

Visa liberalisation: Commission reports on fulfilment of visa-free requirements by Western Balkans and Eastern Partnership countries

Eurozone: Despite anemic growth and shaky banks marks record trade surplus

Can North Korea and the U.S. strike a nuclear deal?

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s