The European Commission proposed a new compromise Wednesday to protect EU industry against unfairly cheap imports, in an effort to win over member states before China can benefit from new rules making it harder to act against dumping practices.
China is the European Union's largest supplier of goods, but the bloc believes that some of its exports illegally undercut European prices. To counter this, Brussels has been resorting to anti-dumping duties on various Chinese products, notably in the steel sector.
But World Trade Organization (WTO) rules for calculating fair Chinese export prices are about to change, making it harder to identify cases of dumping.
The commission, the bloc's executive, has long been urging member states to adopt proposals aimed at adapting the EU's trade defence tools to new economic realities.
"Our current rules are proving insufficient to combat the harm from unfair foreign competition," said European Commission President Jean-Claude Juncker. "We cannot stay idle."
One stumbling block has been the practice of calculating dumping duties based on the minimum markup necessary to prevent direct harm to EU industry, rather than the full margin by which a product's market value has been undercut.
The commission wants to curb this approach, known as the lesser duty rule, in order to better protect EU industries. It is favoured, however, by member states that champion free trade.
As an example, the commission cited average EU anti-dumping duties on certain Chinese steel products, which stood at 21.1 per cent, while the same goods were hit by a levy of 265.8 per cent in the United States, which does not apply the lesser duty rule.
By way of compromise, commission Vice President Jyrki Katainen on Wednesday proposed keeping the lesser duty rule but not necessarily applying it in cases of "a significant and serious massive overproduction problem which leads to dumping."
He also suggested new criteria to judge whether state intervention was keeping the price of imports to the EU artificially low.
These would include "the widespread presence of state-owned enterprises, discrimination in favour of domestic companies and independence of the financial sector," Katainen said.
The commission hopes its proposals will be adopted before the new WTO rules for China take effect in January. EU leaders are expected to discuss the issue at a summit in Brussels this week.
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