The FTA welcomes the announcement by the European Commission that it is recognising its international commitments under the WTO and will no longer conduct anti-dumping investigations under the automatic assumption that China operates under non-market economy conditions. Whilst the FTA accepts that prices in China can be unreliable, we have always protested that the “analogue country” method used to calculate normal value is unreliable, inflates the dumping margin and results in excessive duties that negatively affect EU importers.
In our position paper we advocated that in place of the analogue country system, the Commission could use a method similar to that in investigations conducted against Russia. The new proposal closely follows this suggestion. Although the recent WTO Appellate Body ruling on biodiesel from Argentina does restrict the manner in which the method is applied, the FTA believes that as such the method is WTO permissible.
The new method will only be applied when the Commission establishes the existence of state-induced market distortions and the level of duties imposed will depend on the manner in which the new method is applied. As such, the FTA believes strongly that independent scrutiny by authorised interested parties in investigations must be allowed. To this end we will continue to push for far greater transparency, with access to information pertinent to the outcome of an investigation as expressed in our position paper.
We trust that this fair solution to a controversial issue will be accepted by China and will result in a “normalisation” of trade policy relations between the two trading blocs.
Christian Ewert, Director General
In an anti-dumping investigation, the normal value (essentially the domestic market price) is compared with the export price to calculate the dumping margin. However, in countries which the EU considers to be non-market economies (such as China) the EU Commission considers that the domestic market price is unreliable owing to state interference. It therefore calculates the normal value based on prices in a market economy third country (an “analogue country”). Using an alternative method to calculate the normal value is permitted under Section 15 of China’s Protocol of Accession to the WTO. This exception is due to expire on 11 December 2016.