European Union countries agreed on Wednesday new rules to combat dumping, a move that targets cheap imports of products such as steel from Chinese manufacturers.
The European Union and many of China’s other trading partners have debated whether to treat China as a “market economy”, which Beijing says was its right at the end of 2016, some 15 years after it joined the World Trade Organization.
For now, China is treated as a special case. Investigators from the EU determine whether Chinese export prices are artificially low by comparing them with those of a third country, such as the United States, rather than with domestic prices in China.
The European Commission, now backed up by the EU’s 28 member states, believes the rules for China must be changed and has proposed that the normal reference value in dumping cases involving WTO members should be domestic prices.
However, if there are “significant market distortions”, investigators can instead use international benchmark prices.
Such distortions would include state interference, from state-owned enterprises to arranging cheap financing or discrimination in favour of domestic companies.
Italy, which faces a general election within a year, had initially rejected the proposal, but agreed on Wednesday after a further line was added on distortions to include inadequate enforcement of bankruptcy, corporate or property laws.
The effects of globalisation, and dumping by China in particular, has become a charged political issue. French presidential candidate Emmanuel Macron said on Tuesday he would push the EU to raise anti-dumping duties.
The new proposal, which may have to be reworked before it secures European Parliament backing, is officially country-neutral, with no mention of China.
Critics have said the proposal shifts the burden of proof, meaning EU producers will have to show distortions rather than Chinese companies show their absence, and so risks opening Europe’s doors to more cheap Chinese products.