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Commission’s Threat to Speed Up Adoption of New EU Anti-dumping Rules Criticised; Parliament Likely to Remain Tough

It was reported on 19 May 2017 that the European Commission has exhorted EU lawmakers to speed up adoption of the new EU anti-dumping methodology, warning that anti-dumping duties on imports from mainland China may have to be refunded unless they manage to quickly adopt the new rules.

Since the expiry of certain provisions of mainland China’s WTO Accession Protocol on 11 December 2016, the EU continues to struggle to reach a compromise on the reform of its anti-dumping legislation.

At the moment, the ball is in the court of the European Parliament, which – under pressure from various lobbying groups – is likely to ensure that the trade defence rules on imports of mainland Chinese origin remain as strict and as effective as possible.

The EU institutions are currently in the process of reforming the anti-dumping legislation, in order to make it compatible with mainland China’s new market economy status within the WTO framework. While the long-awaited European Commission proposal was published on 9 November 2016, the Council and the European Parliament must agree on a final text of the new methodology before it can enter into law. Until that moment, the old EU anti-dumping methodology continues to apply.

EU Member States finally managed to reach a political compromise on the new methodology to combat injurious dumping on 3 May 2017, and the European Parliament is expected to determine its negotiating position at the meeting of its Committee on International Trade (INTA) on 20 June 2017. A plenary vote within the European Parliament will then, it is hoped, take place in early July, before the summer recess.

Once the European Parliament’s negotiating position is determined, the negotiations between the Council and European Parliament will be able to commence. This is expected to happen in the autumn of this year.

Threats emanating from the European Commission, although not falling on deaf ears, have nonetheless been criticised as empty and unreasonable.

First, lawyers and lawmakers have noted that the European Commission itself, whilst having known about the 11 December 2016 deadline for fifteen years, only published its proposal five weeks before that deadline.

Second, the European Commission’s threats should be seen in light of the ongoing trade battle between mainland China and the EU. As previously reported, mainland China launched a WTO case against the EU on 12 December 2016 over its market economy rules. Beijing insists that it should be treated as a market economy in anti-dumping investigations as of 12 December 2016, and is determined to force the EU to use the costs and prices of Chinese companies in all instances when calculating dumping margins.

Mainland China’s complaint essentially challenges the EU’s failure to modify its anti-dumping legislation which it feels ought to have incorporated clear changes regarding mainland China’s market economy status in a timely manner.

If the EU fails to adopt its new anti-dumping methodology before the WTO rules on Beijing’s legal challenge, the European Commission argues that this would – assuming that the WTO rules in favour of mainland China – incentivise Chinese companies to ask EU judges to overturn the anti-dumping duties which applied to their exports since 12 December 2016. If EU judges were to follow this reasoning, the Commission argues that EU Member States may be forced to refund anti-dumping duties to the European importers affected.

The Commission wants to avoid such a scenario at all costs, which explains why it is keen to show mainland China and the WTO that it has implemented the changes regarding mainland China’s market economy status as soon as possible.

It has, however, been argued that the Commission’s fears over repayment of EU anti-dumping duties are unlikely to materialise, due to the fact that EU judges have, in recent cases, stated that it is not within their role to assess whether the EU has complied with its WTO obligations.

Third, the position of the European Commission assumes that the new EU anti-dumping methodology would be in line with the EU’s WTO obligations, something which has been contested by multiple sources, including by mainland China itself.

In its current complaint, mainland China notes that it is aware of the EU’s legislative processes of enacting new anti-dumping legislation, and explicitly mentions that its complaint “also concerns any modification, replacement or amendment to [EU trade law], and any closely connected, subsequent measures”. By doing so, mainland China signals that it is not satisfied with the current European Commission reform proposal.

This suggests that the EU can expect additional WTO challenges at the hands of mainland China against revised EU legislation in the coming year, making the Commission’s push for a swift adoption of the expected new anti-dumping legislation largely irrelevant.

Content provided by Picture: HKTDC Research
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