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Europe must change the way it measures China's production, says Beijing

The European Union and the World Trade Organisation (WTO) should change the way they calculate production costs for China in anti-dumping reviews, China's Ministry of Commerce has said, according to China News. 04 Mar 2016

China is not currently considered to be a market economy under WTO rules and therefore its prices do not need to be taken at face value. Instead, the EU uses the production costs in a third country to define the normal value of its experts.

Shen Danyang, a spokesman for the Ministry of Commerce said that the EU and other members of the WTO should stop using this system, China News reported.

Many anti-dumping investigations on Chinese exports are conducted under this mechanism despite China having successfully built a market economy after decades of reform and opening up, Shen said, according to China News.

The European Commission has launched a consultation asking whether it is time to grant China market economy status and change the EU's anti-dumping policies toward the country.

The Commission has asked whether the EU should change the treatment of China in its anti-dumping investigations after December 2016 when certain provisions in China's Protocol of Accession to the World Trade Organisation expire, and how that might work.

This is an important issue for the EU, competition law expert Guy Lougher of Pinsent Masons, the law firm behind Out-Law.com said last month. It will be more difficult to stop China 'dumping' goods on EU markets if the Chinese economy is re-designated as a market economy, he said.

The Commission described the consultation as "part of an in-depth impact assessment that will include a careful study of the economic effects of any potential change broken down by member states, with a particular focus on jobs".

EU trade commissioner Cecilia Malmström recently asked China to reduce the overcapacity in its steel mills and said the European Commission is to open three new anti-dumping investigations in relation to steel products emanating from China.

In January, the WTO supported China in a trade dispute with the EU over anti-dumping measures imposed in China's fastener industry in 2009.

The WTO said that the European Union had defined the domestic fastener industry incorrectly, leading it to wrongly assess production levels in the EU. The EU had also used an Indian company, Pooja Forge, as a proxy for Chinese prices, "to determine the normal values on the basis of prices of fasteners sold in an appropriate surrogate country", the WTO said.

However China queried how this price comparison had been made, claiming that product types were not comparable.