Associations Warn EC on China Anti-dumping

Three German trade associations from the chemical, electrical and mechanical engineering industries have issued a joint statement urging the European Commission to cooperate with China and find a common solution on trade measures. The Council of Ministers will meet on Oct. 21 and decide how to proceed.

The Verband der Chemischen Industrie (VCI), Verband Deutscher Maschinen- und Anlagenbau (VDMA) and Zentralverband Elektrotechnik- und Elektronikindustrie (ZVEI) made the statement in response to the Commission’s announcement that it is planning to introduce a completely new method of calculating anti-dumping duties against China.

By Dec. 11, when the 15-year period of China’s accession protocol with the World Trade Organization (WTO) ends, the EU must amend its anti-dumping law to treat the country in the same way as it treats all other WTO members. China is currently classified by the EU as a “non-market economy” and is subject to the majority of the economic bloc’s anti-dumping measures.

President of the European Commission, Jean-Claude Juncker, said the current rules require an urgent update as they are insufficient to combat the harm from unfair competition. The new methodology would address situations where market conditions do not prevail and would allow the EU to impose higher duties in instances where there are massive overcapacities in exporting countries. It would also capture market distortions linked to state intervention in third countries that mask the true extent of dumping practices.

While agreeing that Europe must continue to have effective protection from goods dumped by China, the associations ask that particular attention be paid to ensuring that adjustments to current antidumping law do not breach WTO rules, and that tariffs must not be driven artificially higher to the detriment of the competitiveness of processors and importers. Any methodology used against China that does not comply with WTO rules is at risk of being challenged in a WTO dispute settlement.

Advocating neutral trade measures that ensure fair competitive conditions, VCI, VDMA and ZVEI believe the EU should agree on the question of China’s market economy status with important partner countries such as the US, Canada, Japan and India. Under the Commission’s current proposal, the EU will not grant “market economy status” to any country, but will adapt its trade measures to maintain an equivalent level of protection.

Although they are calling for trade cooperation between Europe and China, the associations nonetheless said the Commission should insist that China open up its market to foreign investors to a greater extent, given that significant limitations remain for key industries.