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China’s Market Economy Status Coming? Concerns over Bike Anti-Dumping 

Laws & Regulations

BRUSSELS, Belgium – Next year June the current anti-dumping duties on the import of China made bicycles and parts are ending but are expected to run another 9 months during a review period. This raises questions on what to expect. Currently the EU and China are disputing on how to handle trade defence (anti-dumping) cases under World Trade Organization (WTO) rules.

China’s Market Economy Status Coming? Concerns over Bike Anti-Dumping 
China could become less often target of EU anti-dumping investigations. – Photo EU

The dispute between the WTO and China focusses in particular over subsidy disciplines. This has all to do with China’s industrial overcapacities and Beijing’s pressing demands to be treated as a market economy in trade defence cases.

China’s proposal

In current discussions over the reform of the WTO’s Antidumping Agreement of 1994 China is tabling a proposal that obliges members of the WTO to initiate trade defence cases when the entire domestic industry of a country is behind the case, and not only a majority, as under current WTO rules. China is also requesting longer early notification periods, and greater transparency on cases, such as the full text of an industry’s written application to their antidumping authorities.

China no longer non-market economy

In Brussels, the EU is overhauling its trade defence rules to be able to better capture state subsidisation now that China is expected to no longer be treated as a ‘non market economy’ by the Commission’s anti-dumping department. The end of the ‘analogue country methodology’ applied to non-market economies in the EU would mean China would be less often a target of EU trade defence investigations and anti-dumping duties lower.

‘Ambiguous subsidy allegations’

In response to a rising trend in the EU and elsewhere to use foreign state subsidies as a basis to determine ‘dumping’ and damages to import-competing industries, China argues that current WTO rules leave too much room for discretion to trade defence authorities. Under current rules in the WTO’s Agreement on Subsidies and Countervailing Measures, “the evidentiary standards for subsidy allegations are ambiguous and without clear instructions”, China’s submission reads.

Beijing is demanding that “the evidentiary standards should be further clarified in order to improve the initiation standards and practices of Members, increase transparency of the process and better protect the legitimate rights of exporting Members”.

China’s WTO accession

China brought a trade dispute against the EU in December 2016, the day after a deadline in China’s WTO accession protocol was missed. WTO panellists are working towards a report by the end of 2017. This is a case many expect the EU to lose. China is also in consultations with the United States over the same issue.

End 2017 is when the EU hopes it will have finalised its current trade defence instrument overhaul. Member states agreed on a new legislative text that observers say integrates sufficient elements to be able to better capture state subsidisation but also likely remains within the bounds of WTO legality. However it is still under discussion at the European Parliament. A first meeting between the Council, the Commission, and the Parliament took place on 12 July 2017. Little progress was reported after that meeting.

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