EU Commission to change trade defence rules in response to China

But for nations like China that aren’t considered to be market economies, the European Union has been using prices in third countries as a substitute for what the domestic cost of production in China should be.

The European Commission said on Wednesday it would propose changing the way it calculates unfair dumping and subsidies in response to China’s demand that it be treated like a normal market economy by the end of the year. “The past two WTO rulings on Chinese export restrictions have been crystal clear, these measures are against global trade rules”, European Union trade commissioner Cecilia Malmstroem said.

Wilson, the deputy chief of the USA mission to the WTO, said China’s leaders had endorsed a number of far-reaching reform pronouncements, including that the market would be “decisive” in allocating resources, and it was clear that serious efforts were being made.

It was slapped with non-market-economy status as a “temporary provision” when it joined the WTO in 2001.

Katainen said the new approach would lead to duties very similar to those in place today.

In Washington, the United States trade representative’s office said China’s export duties ranged from five to 20 percent, raising prices for overseas buyers while Chinese companies paid much less and had more secure supplies. He also advocated speeding up the time it takes for anti-dumping tariffs to apply – to seven from the current nine months. Of 34 ongoing investigations, 22 concern China, the most notable related to different grades of steel.

China is undergoing a regular two-yearly review of its trade policies at the WTO this week, in which the body’s other 162 members get to quiz its officials and critique its policies.

In filing a similar action last week before the WTO, the United States government said that when China joined the WTO in 2001, it agreed to eliminate such export duties but had failed to follow through on the commitment.

The EU and China agreed at a joint summit last week to discuss how to deal with overcapacity, although it is not clear whether this goes beyond production of steel.