EU fails to quit "analogue country" practice on China as required by WTO rules

The European Union (EU) fails to quit the "analogue country" practice on China as required by the World Trade Organization (WTO) rules, as proposed changes to its existing anti-dumping laws are but a disguise to maintain it.

According to the Article 15 of the Protocol on China's accession to the WTO in 2001, members should cease the surrogate country approach in anti-dumping investigations on China after Dec. 11, which expires exactly 15 years after China's admission.

However, the proposal the European Commission, EU's executive arm, last month submitted to the European Council and the European Parliament for approval, in order to update its anti-dumping and anti-subsidy methodologies, will not put an end to using cost data of production in a third country to calculate the value of products from China.

While doing away with listing "non-market economy," a status it has denied China, the bill proposes to use "international" price and cost references in further anti-dumping and anti-subsidy cases where "market distortion" is found.

This is a concept unilaterally put forward and defined by the EU and not found in WTO rules, experts said.

The EU's proposal law, if approved, will be a disguise to allow it to continue the analogue country practice, and so with more options,McGuirewoods international trade lawyer Yongqing Bao told Xinhua.

This will represent a failure to conform to the WTO rules, and so does the EU proposed new way to use data that involves "international" references, according to Bao.

The new methods will enable the EU not to base its anti-dumping investigations on the price and cost of Chinese products, said Renato Antonini, who focuses on EU trade and WTO laws and is a partner in Jones Day, another American law firm.

Chinese President Xi Jinping (C) shakes hands with European Council President Herman Van Rompuy (R) and Jose Manuel Barroso, president of the European Commission, during a photocall in Brussels, Belgium, March 31, 2014. Photo: Xinhua

In the eyes of Edwin Vermulst, a partner of the VVGB Advocate law firm in Brussels, the EU proposals amount to a new version of its "non-market economy" practice.

They appear to be non-discriminatory, but would in fact continue targeting China, he said.

Moreover, it is expected to take a year before the new EU anti-dumping law takes effect. To continue the current analogue country practice on China before that, as EU has said, "breaches EU's related WTO obligations," said Bao, who was echoed on the point by Antonini.

Experts believe resorting to the WTO dispute settlement mechanism would be the most effective countermeasure as far as the EU breaches are concerned.

Chinese Commerce Ministry initiated on Dec. 12 the WTO mechanism against both the EU and the United States to defend China's lawful rights and interests and the world's multilateral trade system.

In the long-term interests of both China and the EU as well as their economic and trade cooperation, analysts believe it is the time for the EU to dump protectionism and lift bilateral cooperation to a higher level.

The EU has become China's biggest trade partner and the two sides have enjoyed sound development of economic and trade cooperation in recent years.

Data from Chinese customs authorities showed bilateral trade grew between January and October this year to total 2.94 trillion yuan, or some 427 billion U.S. dollars.

Also, anti-dumping cases account for less than 2 percent of the total EU-China trade and it is not worth it for Brussels to compromise bilateral trade, said Pierre Defraigne, executive director of the Brussels-based think tank the Madariaga-College of Europe Foundation.

In recent years, the world economy has undergone enormous challenges with a slow recovery and a surge of protectionism in global trade.

The EU and China, both major economies in the world and important partners to each other, should bolster their cooperation and jointly deal with the anti-globalization trend.

(APD)