Beijing Review

48 BEIJING REVIEW APRIL 20, 2017 http://www.bjreview.com

ESSAY

A Flawed Verdict

By Lan Xinzhen

T

he European Commission (EC) decided on April 6
to impose an 18.1-35.9 percent anti-dumping duty
on imported Chinese hot-rolled steel coil. In re-
sponse, Chinaís Ministry of Commerce said it would look
into the EUís protectionism tendencies toward Chinese
steel products.
The anti-dumping measures launched by the EU
against China have attracted widespread attention owing
to the sensitiveness of the issue.
The EC has violated Article 15 of the accession
protocol signed when China joined the World Trade
Organization (WTO) in 2001. According to the pro-
tocol, the surrogate country approach expired on
December 11, 2016.
The surrogate country approach was adopted with
consideration to the price advantages of Chinese prod-
ucts resulting from low-cost labor and resources. Under
the approach, WTO members use costs of production
in a third country in anti-dumping investigations against
products from countries on its ìnon-market economyî
list, which includes China. The practice allows importing
countries to levy high tariffs easily in trade disputes.
At present, the United States, the EU and Japan
are still persisting with the approach while over 80
WTO members, including Australia, New Zealand and
Switzerland, have dropped it.
The EC has continued to apply the unfair and un-
reasonable surrogate country approach and uses U.S.
production costs to levy high tariffs on Chinese imports,

which has damaged Chinese enterprisesí interests.

In addition to the hot-rolled coil, other steel prod-

ucts from China such as seamless steel tube bars and

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investigations by the EU. Have Chinese steel products

really threatened European steel producers? Or, in other

words, are dumping practices really involved in Chinese

steel exports to the EU?

The answer is no. Chinese steel exports accounted

for no more than 5 percent of the EU market in 2015

and declined significantly in 2016. The EC accusation

that Chinese hot-rolled coil has damaged and threatened

the EU steel industry lacks factual basis.

Currently, the steel industry worldwide is haunted by

overcapacity, with steel workersí income shrinking and

unemployment increasing. Moreover, the specter of the

EU debt crisis lingers and the EU economy remains slug-

gish. As a consequence, steel workers in Europe staged

multiple protests to voice their discontent in 2014 and

2015. The EU has therefore imposed hefty anti-dumping
      duties on Chinese steel products in a bid to ease the
      pressure from within.
      Protectionism is to no avail in solving the global prob-
      lem of steel overcapacity. It will only disrupt the order of
      international trade and harm the sustainable develop-
      ment of the global steel industry.
      At the G20 Hangzhou Summit held in September
      2016, G20 members including the EU promised to re-
      duce or at least not adopt new protectionist measures till
      the end of 2018.
      At the 18th China-EU Summit held in Beijing last July,
      China agreed to the EUís proposal of establishing a joint
      working team to allow the EU to check and supervise
      Chinaís steel export volume, prices and subsidies to steel
      producers. The move was aimed at helping the EU de-
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      its pledge of cutting overcapacity. However, the EC deci-
      sion betrays the promise.
      Rightful anti-dumping measures are a kind of trade
      remedy directed at guaranteeing fair competition and
      promoting healthy global trade. They are supported by
      the international community. However, in reality, anti-
      dumping measures are often used wrongly, as in this
      case.
      Hopefully the EU will realize that negotiations and
      cooperation are more effective in solving trade frictions
      than protectionism. Q

Protectionism

is to no avail

in solving the

global problem

of steel

overcapacity. It

will only disrupt

the order of

international

trade and harm

the sustainable

development of

the global steel

industry

Copyedited by Sudeshna Sarkar

Comments to [email protected]

Chinaís Steel Exports in 2016

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18 percent year on year

(Source: General Administration of Customs)

Total: 108.43 mln tons,

down 3.5 percent year

on year