EU Council Signs Off on Negotiating Position in Revising Anti-Dumping Methods

11 May 2017

The Council of the European Union signed off last week on their negotiating stance regarding the planned updates to the bloc’s anti-dumping methodology, marking the next step in a process that kicked off last year.

Under scrutiny is a proposal tabled by the European Commission in November, which would involve a new, “country-neutral” method for assessing market distortions when conducting anti-dumping investigations.

The Commission has explained the move as part of a larger effort to upgrade its trade remedy toolkit, particularly given newer challenges that have emerged on the global stage such as industrial overcapacity. Indeed, the process has particularly drawn the attention of industry groups, including in steel, given the growing number of trade remedy investigations involving the product. (See Bridges Weekly, 10 November 2016)

“Today we gave our support to a new, non-discriminatory anti-dumping methodology that will help ensure that imported products are sold at a fair and equitable price in the EU, no matter where they come from. This will strengthen Europe’s trade defence instruments and will protect jobs and enhance competitiveness,” said Christian Cardona, minister of economy, investment, and small business in Malta.

The Commission proposal would aim to “detect and redress distortions to the market resulting from state intervention in other countries,” while still adhering to international obligations, including at the WTO, according to a Council statement.

Moving away from the classification system dependent on “market” and “non-market” economies, the new methodology would look at individual cases – such as a specific industry or product – where “significant distortions” arise in domestic prices or costs. The proposal put forward adopts a non-exhaustive list of examples of what may qualify as significant “market distortions,” and outlines how the EU would calculate dumping margins.

WTO context

Another factor giving momentum to the process was China’s fifteenth anniversary as a WTO member, which passed last December. The milestone sparked a debate in trade circles over how to interpret certain provisions of China’s accession terms, specifically on how to determine “price comparability” in anti-dumping probes.

Before this date, WTO members were allowed to calculate trade remedies involving Chinese producers/exporters either by using domestic prices or by using “surrogate prices” from third countries. Which of these methods was used depended on whether Chinese producers could prove that market economy conditions prevail in their industry, with importing members allowed to use the latter option if that threshold was not met.

China’s accession terms said that “the provisions of subparagraph (a)(ii) shall expire 15 years after the date of accession,” referring to the subparagraph which allows for importing WTO members to “deviate” from using “strict comparisons” with the Asian economy’s domestic prices and costs. How to interpret this provision and other aspects of the “price comparability” section of China’s accession protocol continues to be debated in the trade community.

China has since filed WTO disputes with both the EU (DS516) and the US (DS515) on the subject. A panel has been established to hear the case involving the European Union, while the dispute with the US is still in the consultations phase.

Upcoming talks

While the Council’s negotiating position largely endorses the Commission’s methodology, the proposed changes still need to go through additional steps in EU legislative procedure. The European Parliament will need to adopt its own negotiating stance, at which point the EU institutions can begin formal talks to hammer out a final package.

The overhaul of the current anti-dumping methodology is occurring in tandem with a broader revision of the EU’s trade defence instruments, initially proposed by the Commission in 2013 and now being debated at the Council level. (See Bridges Weekly, 15 December 2016)

ICTSD reporting.

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