New Trade Rules for China? Opportunities and Threats for the EU

23-02-2016

Paragraph (a) (ii) of Article 15 in China’s Accession Protocol to the WTO - which determines the basis on which dumping margins are calculated in Anti-dumping proceedings against China - is about to expire in December 2016. This ad hoc briefing aims to shed light on the economic and political implications that may arise for the EU from different strategies related to the treatment of China after this date, including the possibility of granting it market economy status. The study provides an economic, legal, as well as political overview of EU Anti-dumping regulation and compares it to that of China’s other main trading partners. It demonstrates that Anti-dumping constitutes a significant and frequently used trade defence instrument, although its use is extremely heterogeneous across countries and sectors. Even though market economy status is associated with lower Anti-dumping duties, granting it to China would not render the EU defenceless against dumping. Beyond first order effects on the magnitudes of AD duties, a unilateral decision will have much wider implications, both for the EU’s relations with China as well as with other countries, particularly the USA. These have to be taken into account in the decision making process. This ad hoc briefing can only be a first step towards a full understanding of the impacts of granting MES to China on EU trade policy and European welfare. The briefing illustrates that more research is required.

Paragraph (a) (ii) of Article 15 in China’s Accession Protocol to the WTO - which determines the basis on which dumping margins are calculated in Anti-dumping proceedings against China - is about to expire in December 2016. This ad hoc briefing aims to shed light on the economic and political implications that may arise for the EU from different strategies related to the treatment of China after this date, including the possibility of granting it market economy status. The study provides an economic, legal, as well as political overview of EU Anti-dumping regulation and compares it to that of China’s other main trading partners. It demonstrates that Anti-dumping constitutes a significant and frequently used trade defence instrument, although its use is extremely heterogeneous across countries and sectors. Even though market economy status is associated with lower Anti-dumping duties, granting it to China would not render the EU defenceless against dumping. Beyond first order effects on the magnitudes of AD duties, a unilateral decision will have much wider implications, both for the EU’s relations with China as well as with other countries, particularly the USA. These have to be taken into account in the decision making process. This ad hoc briefing can only be a first step towards a full understanding of the impacts of granting MES to China on EU trade policy and European welfare. The briefing illustrates that more research is required.