Page 11 - Azerbaijan State University of Economics

Fabio Massimo Parenti, Shi Chen: EU-China Relations in the Framework of the BRI a Critical
Analysis of EU Regulations on Trade and Investments

 November 9 2016: The Commission elaborated and submitted a proposal to
INTA (EP Commission on International Trade).
 June 20 2017: after long discussion and analysis, INTA passed a new legislation
proposal through some amendments.
 Oct 3-12: agreement on the new rules between EP and European Council.
 Nov 15 2017: EP adopted a new resolutions (provisional) based on the previous
steps, approving amendments on EU's new anti-dumping rules.
 Dec 20 2017: EU puts in place new trade defence legislation. After one year
from the initial proposal.

2.3 What implications?
The European Union eliminated the distinction of the type of economy, satisfying
the China’s request on WTO obligation of China’s accession protocol (Article 15,
subparagraph (a)(ii) states: “The importing WTO Member may use a methodology that is not based
on a strict comparison with domestic prices or costs in China if the producers under investigation
cannot clearly show that market economy conditions prevail in the industry producing the like
product with regard to manufacture, production and sale of that product”. However, in the paragraph
(d) it is clearly said: “In any event, the provisions of subparagraph (a)(ii) shall expire 15 years after
the date of accession”). However, it kept in place the possibility to use non-standard
method in price determination for China in case of “significant market distortions”.
China welcomed that the proposal abolished the “non-market economy status” list,
but criticized that it introduced a “market-distortions” clause (Members of Parliament
have gathered a broad range of criteria, including for example the exporting country’s adherence to
and compliance with multilateral environmental agreements (MEAs) and core conventions of the
International Labour Organization (ILO), to complement the succinct non-exhaustive list proposed by
the Commission. In the construction of normal value, the European Commission will still be able
to use domestic prices and costs, but only if exporting producers can clearly show that (i) they are not
directly or indirectly affected by distortions, and that (ii) their factors of production are not distorted.
With the new proposal this proof should be produced by EC), which prolong the “analogue
country” methodology under a new label (In the context of the “analogue country” approach,
the domestic prices are replaced by prices and costs from a third (‘analogue’ or ‘surrogate’) “market
economy” country). The previous abuse of this vague expression is disappeared, but not
the substance to justify a discriminatory treatment for China in certain sectors. With
the new regulations the social and environmental impact of dumping will be taken
into account, when deciding on anti-dumping measures, and the EU Commission has
to monitor circumstances in exporting countries, to decide the application of tariffs
or not. The EU stressed more on criteria to define “free market” conditions (and
“market distortions”) than to distinguish the type of the economy. However, the
substance of maintaining differential price setting with China remains in place.
Something that China considers a strong discriminatory treatment.

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