(Yicai Global) Nov. 17 -- The recent amendments to the European Union's methodology in anti-dumping investigations introduce 'market distortions,' a concept that does not exist in World Trade Organization rules, China's state-owned Xinhua News Agency said in a commentary yesterday, adding that the new legislation is trade protectionism in disguise, and will hurt other nations without benefitting itself.
The European Parliament passed amendments to the methodology two days ago, a sign that the EU's new anti-dumping law could be put into effect by the end of this year, as planned.
The new regulation advocates using 'international market prices' to calculate anti-dumping margins in place of the surrogate country approach. It was unilaterally proposed by the EU and does not comply with WTO rules, Xinhua said. Under Article 15 of the Protocol of China's Accession to the WTO, China should automatically have gained market economy status on Dec. 11, 2016. The EU is using this market distortion concept as a disguised way of continuing the surrogate country approach to trade, the commentary claimed.
Previous anti-dumping and countervailing cases between China and the EU have repeatedly proven that employing new trade 'weapons' and increasing trade barriers will only lead to increased bilateral friction between the two economies, the commentary added. The EU believes that the market distortion concept will be a useful tool, but it is actually a double-edged sword. It can only hurt other nations and is not in line with cooperation between China and the EU, Xinhua said.
The European Union is China's largest trading partner and the latter is the EU's second-largest. Daily trade averages more than EUR1.5 billion (USD1.69 billion), but there is still scope for development. The EU's new regulation undermines its reputation as a free trade advocate, the commentary claimed, adding that it is narrow-sighted of the EU to only consider a handful of industries and not look at overall trade with China.
Overcapacity is a cyclical phenomenon in market economies; it is a structural as well as global issue. Since the outbreak of the international financial crisis, global economic downturn has led to falling demand, which is the main contributor to excess capacity in the steel and other industries. The root cause of the current dilemma facing the EU's steel industry is its declining international competitiveness. To cut global capacity, all parties need to work together, rather than build trade walls through concepts such as market distortions, Xinhua said.
Now that China and the EU are entering a new, key period of development, they should work together with greater wisdom and responsibility to solve old problems and deepen cooperation. Only in this way can the China-EU partnership maintain its hard-earned momentum.