The economies of the EU are among the most open in the world, and our companies are among the most active on international markets. This openness has helped Europe become one of the wealthiest parts of the globe, with generous public services and advanced social welfare. However, there are other countries that aren’t nearly as open as we are, that sometimes play by an entirely different rulebook. Such unfair trade puts pressure on our producers and workers. Perhaps the most telling example is the massive overcapacities, notably from China, that we are witnessing in the steel industry – a sector that is highly important for the European economy. Globalisation – with its constant exports and imports, international competition and global value chains – is a reality in our interconnected world. Nevertheless, trade must stick to certain rules, and we need a clear and effective rulebook for when things go wrong. The EU needs to be able to shield manufacturers from unfair competition.
In a proposal presented today, the European Commission is sharpening our trade defence tools while respecting and upholding international rules. The Commission is introducing a new method to calculate dumping, which will be able to capture market distortions linked to state intervention in other countries. That is – cases when a state has such a level of control that the price and costs of goods exported to the EU do not reflect market realities. I want to ensure that, also in the future, the anti-dumping duties imposed by the Commission will continue to reflect the true dumping that takes place, on a legally sound basis. The proposal we are now putting forward moves the EU closer to the trade defence systems of other major trading partners around the world, including the United States.
These new rules (more info here) will apply to any WTO member country or sector where such significant distortions prevail. To increase transparency, the Commission services may prepare public reports to point out possible distortions. These reports will be available to EU industry to help them substantiate their claims, and will also be part of the Commission’s investigation file so that all interested parties, including non-EU producers and exporters, can express their views.
A word about the background – today, EU legislation singles out China and a few other countries as “non-market economies”, for when we calculate our anti-dumping duties.
We now propose to delete that list altogether. This does not mean that China somehow is now a market economy – it clearly is not. By deleting the list we make our legislation country-neutral, potentially applying it to all WTO countries. We create a new methodology which specifically takes into account significant distortions through state intervention, in a given country or sector.
Earlier this year, we launched a public consultation on this matter and received more than 5.000 replies. We have also undertaken a thorough impact assessment of the changes now proposed, complemented by discussions with Member States and Members of the European Parliament, as well as extensive contacts with social partners and other stakeholders. This feedback was instrumental in helping us develop the changes that are being proposed today.
Since I became Commissioner for trade, I have met stakeholders with very different views on the EU’s trade defence instruments: from manufacturers concerned about job losses, to retailers worried about the costs for consumers if much higher customs duties could be imposed. EU governments also have diverging views on this topic.
I have met plenty of people and organisations with robust arguments on both sides. The proposal that the Commission is presenting brings together these views; maintaining a similar level of anti-dumping duties as today, while introducing more flexibility to counter distortions that were not properly captured before. The new system will protect against unfair trade while keeping trade flows in other areas open, to the benefit of both consumers and producers. It confirms our commitment to open markets and international trade rules, while upholding our protection against unfair competition.
I am convinced that what we are proposing is the best way forward, balancing the European interests at stake. I am also confident that the Council and the European Parliament understand the need to proceed swiftly with the adoption of this legislation.
Compliments of the European Commission