European commission promises action against foreign producers flooding world markets with subsidised goods
By Jennifer Rankin
A steel plant in
The EU executive has vowed to toughen up
trade defences in a bid to prevent industry from being overwhelmed by
artificially cheap Chinese imports.
The European commission promised “faster and firmer” action against foreign producers flooding world markets with subsidised goods, dashing
’s hopes of gaining “market economy status”
under existing trade rules. China
The seemingly arcane dispute over nomenclature has gained political potency, as massive overproduction of state-subsidised steel from
has forced the closure of plants across China Europe. In the , some 11,000 jobs are at risk at Tata Steel,
including 4,000 at UK Port
Talbot. Tata Steel
has refused to guarantee the future of the Port Talbot works, although it is working with the government on a rescue plan. UK
Labour MEP David Martin welcomed the EU plan, but warned the “devil was in the detail” and that they were “almost too late” for steel jobs.
argues that US has no automatic entitlement to be treated
as a market economy, because China continues to subsidise steel and aluminium, leading
to massive over-production. On Wednesday, after months of foot-dragging, the EU
executive also said Beijing should not be treated as a market economy. China
“We should forget this phrase [market economy status] because it doesn’t exist anymore,” said Jyrki Katainen, a European commission vice president, as he vowed the EU would be as tough as the Americans on trade defence.
“We can make our procedures both faster and firmer, strengthening our ability to enforce fair trade and bringing us closer to the American model of trade defence,” he said.
EU punitive duties on dumped goods are far lower than those levied by the
. While the EU chooses to abide by the lesser-duty
rule, which restricts punitive tariffs on dumped goods, the US has chosen not to use this voluntary WTO
standard. As a result, US lawmakers have been able to protect domestic
producers, by slapping anti-dumping duties on cut-price Chinese steel that can
be 16 times greater than those from the EU. US
Over the last decade, EU member states, including the
, have thwarted attempts to change the lesser-duty
rule. On Wednesday, Katainen called on countries to compromise and agree a
trade-defence law that has been blocked since 2013. UK
“The market has changed and we are suffering significant overcapacity,” he said. “That is why we have to address the issue.” EU ministers will discuss the plans in the autumn.
The commission also promised new legislative proposals in the autumn to strengthen the EU’s anti-subsidy rules, in an attempt to head off any legal challenge from
. The EU executive believes it has found a
middle way that allows it to meet WTO rules and defend domestic industry
against unfair competition. China
Cecilia Malmström, the commissioner responsible for negotiating EU trade deals, said: “We are not singling out
,” stressing the new rules “could go for any
Long-time EU trade watchers warned the plans could run into obstacles. “Every time a proposal on changing anti-dumping regulation in
Europe has come up, the membership has been split
in two different groups,” said Fredrik Erixon, director for the European Centre
for Political Economy. He forecast the same ideological split among member
states, who ultimately agree the EU rules.
In April the European parliament voted by an overwhelming majority that
should not be granted market economy status.
On the other side, the British government has championed market economy status
for China , as part of former prime minister David
Cameron’s attempt to be China ’s best friend in Beijing Europe.
Erixon said the commission was seeking to downplay the contentious issue of
’s market economy status, by focusing on
trade defences. “The commission has calculated there is no point going into
battle with the European parliament and member states.” China
David Martin, a Labour MEP who sits on the European parliament’s international trade committee, gave a cautious welcome to the plans.
They were a “step in the right direction”, but MEPs needed to know more about how it would work he said. Reform of
Europe’s trade defences was urgently needed, he
said, but this was “almost too late for steel jobs”.
One unanswered question is how the
will manage trade policy once it leaves the
EU. Martin said he worried post-Brexit UK would have weak trade defences. Britain
“All the indications from the current British government is that they would not put up strong trade defence measures,” he said. “They are right to want good relations with
, but not at the price of wiping out much of
our manufacturing industry.” China
The business department, now led by Greg Clark, had not responded to a request for comment at the time of publication on whether it continued to support market economy status for
An editorial in the official Chinese state agency, Xinhua, criticised the EU plan, saying that
was not to blame for declining EU
competitiveness. “European lawmakers’ bias is nothing more than the heavy hand
of trade protectionism squeezing the world economy.” China