The European Union agreed on Tuesday new rules to guard against cheap Chinese imports, ending 18 months of wrangling over trade ties with Beijing, sources said.
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 Organisation.
Following negotiations with EU governments, the European Parliament and the European Commission, the new EU rules will now treat all WTO countries in the same way but will make exceptions for cases of “market distortion”, such as excessive state intervention, a condition set to include China.
The EU kicked off discussions early in 2016 and held public consultations, gathering over 5,000 opinions on how to handle trade complaints against China.
After a number of failed attempts, the European Commission, member states and EU lawmakers overcame their differences on Tuesday, the sources said.
Until now, China has been treated as a special “non-market” case, meaning EU investigators decide that its exports are artificially cheap if the prices are below those of a third country, such as the United States.
China last year launched a complaint at the WTO against Europe and the United States over their trade defence practices.
The European Commission, supported by the EU’s 28 member states, believes the rules for China needed to be changed and proposed that for all WTO members, including China, dumping means selling for export at below domestic prices.
However, if those prices are subject to “significant market distortions”, investigators can instead construct a fair value using international benchmark prices.
Such distortions could include state interference, including state-owned enterprises, cheap financing or discrimination in favour of domestic producers.
Critics, which include many in the European Parliament, say the new rules shift the burden of proof from Chinese to EU producers, making it much harder to impose measures.
The European Parliament has said that if distortions are shown to exist in a given country then the onus should be on its exporters to show that their prices are market-conform.
Source: Reuters (Reporting by Philip Blenkinsop; editing by Robin Emmott)