BRIGHTON, U.K. – Proposed reforms to European Union rules on setting anti-dumping and countervailing protective duties could improve the European common market’s ability to defend its auto industry and local suppliers from cheap imports.
The changes would amend how the EU’s executive branch, the European Commission, calculates whether it can and should impose such duties, and if so – how high they should be.
There is concern it takes too long to impose EU antidumping duties on exported autos and parts whose prices are depressed by high domestic prices and overcapacity, as well as countervailing duties on exports benefiting from excessive government intervention and subsidies. There also is concern these duties may be too low.
A note from the EC says the new methodology amending EU regulations will help the 28-nation coalition target the countries most commonly exporting such items.
One key issue is that China is about to attain market-economy status within World Trade Organisation disputes, which would prevent the EU from making assumptions about the real cost of Chinese exports when deciding whether to impose the duties.
At present, the EU can use a comparable market, such as Brazil’s, to measure what Chinese costs should be, and test whether its exporters are selling at below-cost price. Under the new status, due to take effect in January, the EU would have to look at Chinese cost data.
So under the new proposals, EC officials can consider how a foreign government subsidizes and protects its industries when determining the true cost of its exports without measuring it against a third country.
An EC spokesman says the reforms are “not purely about China – the rules are country-neutral. “The new methodology allows the EU to broaden the mechanisms it can use to counteract dumping across a number of different industries and countries.”
The EU in October imposed a 22.3% antidumping duty on Chinese aluminum car wheels, which it says are being dumped on the EU market at low prices.
Automakers Mum About Possible Cost Savings
The EU auto sector is not commenting on the issue.
A spokesman for Swedish automaker Volvo says only he is unaware of reports suggesting diplomats from his country are working to oppose the proposals within the EU. In addition, the ACEA association of European automakers and the U.K.’s Society of Motor Manufacturers and Traders decline to comment on the issue.
Suppliers are willing to talk, however. Europe’s auto industry accounts for 18% of Europe’s demand for steel, and Charles de Lusignan, a spokesman for the European steel trade association Eurofer, tells WardsAuto the new proposals might help meet concerns the current system is too slow and imposes tariffs that would do little to help European steelmakers. He identifies China as the main country at issue.
He hopes the new system will end the EU imposing anti-dumping and countervailing duties at a level lower than difference between cost and export prices, but at sufficient rates to protect European manufacturers against the imports.
“We welcome the emerging agreement that might see the “lesser-duty rule” being lifted – something we’ve called for a long time – but we are waiting to see whether the terms and conditions can be effectively and consistently implemented,” he says.
Generally, de Luisignan wants the EU trade-defense tools to be “modernized so that European jobs and growth are adequately defended from the unfair dumped products from countries such as China.”
Fundamentally, these duties are “presently slow to deploy and often result in anti-dumping duties too low to compensate for the injury caused by dumping,” he says. “This is partially because of the continuing application of the (lesser-duty rule), but also because of the relatively low target profit margins used in the calculation methodology.”
China is unhappy about the proposals.
“The Chinese side has expressed great concerns and worries about the EU’s trade-protectionist tendency over steel,” a Ministry of Commerce statement says. “China is willing to strengthen exchanges and communication with the European side and properly solve problems that the steel industry is facing.”
EU trade Commissioner Cecilia Malmström says, “The proposals will ensure that the EU’s trade defense instruments are adapted to face new challenges.”
