Last May, the European Parliament voted overwhelmingly to defend EU manufacturers against Chinese dumping.
A year on and MEPs are now debating how to strengthen the European Commission’s new anti-dumping methodology. Yet China is no closer to being a market economy today than it was last year, and should not be treated as one in anti-dumping procedures.
Now, as then, MEPs must send a powerful and united message that free trade must also be fair trade. Without strong anti-dumping measures to protect against Chinese trade distortions, the 30 sectors that we represent at AEGIS Europe – and the downstream sectors they support – will be put at serious risk.
Our companies are high-value, future-oriented and technologically advanced. They account for more than €500 billion in annual turnover and directly employ over 34 million people across the EU’s member states. Europe can only accomplish its ambitious climate and digital agendas through using the materials and products we produce.
There are three actions open to MEPs for safeguarding Europe’s manufacturing base. These will ensure that the new anti-dumping methodology guarantees the current levels of protection.
1. Define what counts as a “significant distortion”
First, MEPs should clearly define when countries are not operating under market conditions. The Commission has said that countries would only be treated differently when “significant distortions” are identified, however it has yet to adequately define the term. This creates uncertainty for EU industry.
MEPs can improve legal certainty by linking the definition of “significant distortions” with the five EU market economy criteria. These have been in place for two decades and provide the most accurate indication of whether countries such as China are distorting their markets.
2. Formalise the process for proving distortions
Second, MEPs must clarify how distortions are verified. The Commission has offered to develop “reports”, identifying distortions in countries or sectors, but has not specified how its assessments will be developed or their precise legal value.
MEPs need to make the Commission’s new reports mandatory and exhaustive. The reports should provide sufficient evidence for the Commission to use the new anti-dumping methodology, without any additional burden on EU industry.
These reports should be completed by the time the legislation enters into force. To provide the essential legal certainty, the existence of significant distortions needs to be determined early on in the Commission’s investigations.
3. Use a non-standard methodology after distortions are found
Third and most importantly, MEPs must require that evidence of the existence of significant distortions automatically triggers the use of a non-standard anti-dumping methodology.
We are concerned that, as it stands, the Commission’s proposal makes it possible to use domestic prices and costs as the baseline for anti-dumping calculations. This would fail to address the distorted nature of prices and costs in countries such as China.
As a rule, dumping calculations should not use domestic prices and costs after one or more significant distortions have been proven. Instead, the Commission should construct normal values from scratch, using a combination of the most appropriate benchmarks for each factor of production. An exporting producer’s costs for a given factor of production should only be used if it proves they are not distorted.
Europe’s manufacturing industries are relying on the European Parliament to stand up for them at this crucial juncture of the reform process. A robust, predictable and standalone anti-dumping methodology will ensure our continued global competitiveness.