A public hearing on trade defence instruments took place this week before the European Parliament’s Committee on International Trade. Various experts discussed the modernisation of trade defence instruments and a new calculation method for dumping.
Both discussions are indirectly related to the fact that Chinese manufacturers increasingly use ruinous prices to force their way into the European market, in particular in the steel industry. According to the Commission, there are currently 41 anti-dumping and anti-subsidy measures in force (of these 18 on products from China), which are aimed at unfair steel imports. With its decision this week to continue to levy tariffs of 65% to 75% on heavy plates from China, the Commission affirmed its position.
Concerning trade defence instruments of the EU, the debate deals with the issue as to how the EU can ensure that products manufactured in the EU are not exposed to unfair competition due to artificially low prices of similar products from third countries. Hence, anti-dumping and anti-subsidy measures enable the EU to levy tariffs on products from third countries if the non-EU product is sold at a lower price in the EU than in the third country itself or if it is subsidised by the government there. Now, the modernisation of these instruments shall above all bring changes as to which deadlines have to be met when initiating proceedings, how high the tariffs levied are and how and when these can be imposed.
It is especially these last two aspects, that caused some controversies in the Committee as different industries are affected by the changes in different ways. For example, potential exemptions for raw materials from the application of the “lesser duty rule” are causing discussions. Some experts in the Committee interpret this as unequal treatment of different industries and demand the same application for all industries. Others promote the general abolition of the rule itself. The tariffs, which could then be levied under the lesser duty rule would be far too low, in particular compared to countries with different rules. This topic has also cause controversies among the Member States in the Council.
Whilst the debate on the modernisation of trade defence instruments has been ongoing since 2013, the considerations concerning a new dumping calculation method are a proposal by the Commission from last year. The second debate was also triggered by considerations of the World Trade Organisation to treat China as a market economy in future. This in turn would also have an impact on the use and the volume of trade defence instruments. However, in order to take account of the fact that due to government influence artificially low prices prevail in some countries, the new calculation method shall include criteria such as state policy and influence, the presence of state-owned companies, the discrimination in favour of domestic companies as well as the independence of the financial sector. In addition, the demand was made in the Committee that the non-compliance with labour standards and extremely low wage levels in third countries should also be regarded as dumping if they are based on poor employees' rights. The EU has the duty to also address this kind of dumping in international trade as commentators argued.