Spotlight: Brussels presents proposal to change anti-dumping, anti-subsidy legislation

The European Commission on Wednesday presented its long-waited proposal introducing changes to the EU's anti-dumping and anti-subsidy legislation against the backdrop of forthcoming changes in the World Trade Organization (WTO) framework.

The move comes one month before the expiration of some provisions under Article 15 of the Protocol on China's accession to the World Trade Organization, due on Dec. 11.

The expiration would require WTO members to end the so-called "analogue country" methodology under which cost data of production in a third country is used to calculate the value of products from China.

In response to the above change, EU legislation would become country-neutral and WTO members will no longer be part of a list of countries subject to the "analogue country" methodology, according to an interpretative document released by the European Commission.

These changes will not lead to any country being granted market economy status, including China.

However, the Commission, the EU's executive arm, left open the option to use "international" price and cost reference in further anti-dumping cases if "market distortion" was found, which could still fall short of its obligation to international trade rules.

"When distortions exist, other benchmarks reflecting undistorted costs of production and sale will be used," it said in the document.

The document said intended changes would concern all WTO members whose economies or certain sectors of the economy are distorted by state intervention.

State interference occurs when a market is, to a significant extent, served by enterprises which operate under the ownership, control or guidance of the authorities of the exporting country, as defined by the European Commission.

Apart from the new methodology for calculating dumping, the European Commission also proposed transitional arrangements for already existing trade defense measures and ongoing investigations.

The new system would only apply to cases initiated upon entry into force of the amended provisions. Any given ongoing anti-dumping investigation at the time of entry into force would remain subject to the existing legislation.

Furthermore, the European Commission has also proposed a strengthening of the EU anti-subsidy legislation so that in future cases, any new subsidies revealed in the course of an investigation can also be investigated and included in the final duties imposed.

"Trade is Europe's best growth lever. But free trade must be fair, and only fair trade can be free," European Commission Vice-President Jyrki Katainen, responsible for Jobs, Growth, Investment and Competitiveness, told a press conference.

"More than 30 million jobs in Europe, including 6 million jobs in SMEs, depend on free and fair trade which remains at the heart of EU strategy for jobs and growth," he added.

"The proposal is important because it means that the EU is living up to its WTO commitments," EU Trade Commissioner Cecilia Malmstrom said, noting the new method is country neutral and does not grant market economy status to any country.

"Competition is good, but global trade must stick to certain rules. We must make sure that we have an effective and clear rulebook when things go wrong," said Malmstrom.

"We are proposing to modify anti-dumping and anti-subsidy regulation, maintaining a similar level of anti-dumping duty as today." She added.

The proposals will be discussed among EU trade ministers on Friday and EU parliament will soon make a decision, Malmstrom noted.

The proposal was tabled after a routine meeting of EU commissioners earlier the day, and is scheduled to be submitted to other European decision-makers including the European Council and the European Parliament.

Any change to the EU's anti-dumping and anti-subsidy legislation will only become effective once the EU institutions and member states have adopted the proposal.

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's 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. Endit