EU anti-dumping abuse harms both China, EU
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Since late July, the European Union (EU) has launched a series of anti-dumping actions against Chinese products, covering steel wire rod, seamless steel tubes, sodium gluconate, steel cables and aluminum road wheels.
With five cases in just three weeks, such a frequent use of anti-dumping probes and punitive duties has been unprecedented. The EU's unusual move has raised wide concern, especially when the world economy is in recession due to the financial crisis.
The EU said its decisions were taken against "unfair" trade practices of some Chinese companies, but it has so far provided no convincing evidence for its allegations.
Take as an example the case of aluminum road wheels, against which the EU started an anti-dumping probe on Thursday. The prices of China's wheels exported to the EU were much higher than in its domestic market. Is it logical for any Chinese manufacturers to "dump" their products at a loss on European markets thousands of miles away?
As by definition, dumping is the act of a manufacturer exporting a product to foreign markets at a price either lower than home market prices or below production costs.
Yet, there are indeed unfair practices. That is on the EU part. The EU has refused to disclose the list of European companies which had lodged the complaints from the very beginning when it started anti-dumping probe into Chinese aluminum road wheels.
This violates the principle of transparency under the World Trade Organization (WTO) rules and the specific regulation of the WTO anti-dumping agreement.
Such an approach is unfair to Chinese companies as it deprives them of their vital right of defense. Besides, under EU anti-dumping rules, an investigation is not to be initiated unless the complainants represent at least 25 percent of the total EU output of the products in question. Is this fair trade practice when the EU pushes aside its own rule in its anti-dumping probe against Chinese companies?
The EU has so far refused to recognize China's market economy status. Instead, it chose Turkey as a substitute country to calculate Chinese companies' cost of producing the aluminum wheels. As a result, China was accused of dumping goods to Europe at an unreasonably low price.
But the choice is arbitrary and unfair to Chinese companies as there is no real comparison between China and Turkey in terms of economic reality or development of their relevant sectors.
The EU's taking hasty anti-dumping measures against Chinese companies is an irresponsible move that has abused trade defense rules. It is motivated by rising protectionism as the 27-nation bloc is in the worst recession since the Second World War.
Commenting on the EU's anti-dumping measures against China's seamless steel tubes, the Wall Street Journal said the move suggests that the EU "is growing more protectionist in the face of the economic downturn."
As early as April this year when the EU decided to impose definite anti-dumping duties on Chinese candles, World Bank President Robert Zoellick criticized the decision as one of the four typical anti-free trade moves after the G20 summit in London.
At the summit, leaders from world major economies, including EU countries, pledged to refrain from protectionism and stick to open trade amid the economic downturn.
The slide to beggar-thy-neighbor protectionism is counterproductive.
The EU's abuse of anti-dumping rules would harm both China and the EU. The probe against Chinese aluminum road wheels would not only hurt Chinese producers' exports to the EU, but also raise the costs of European carmakers, such as Audi and Volkswagen, which need Chinese supply of the auto part. It would by no means help crisis-hit European automobile industry to recover.
The EU's protectionist moves would also damage the authority of world trade rules and risk triggering a trade war. When global trade is already shrinking due to the financial and economic crisis, the last thing to do is to resort to protectionism, which would only further drag down world trade.
EU's slide to protectionism would undermine global efforts to seek a joint solution to the current crisis. History has proved that protectionism could protect nobody from the crisis, but only prolong the economic pains.
Europeans should not forget that the Great Depression in the 1930s stemmed precisely from US protectionist policies, which later plunged the whole Western world into a deeper crisis.
The EU and China are each other's major trading partner. Thanks to efforts by both sides to keep their markets open, their bilateral trade and investment has witnessed tremendous growth. Protectionism is neither conducive to weathering the current economic slump, nor is it in the long-term interests of both sides.
From the London G20 summit in April to the EU-China summit in May, leaders of both sides had committed to free trade and non protectionism.
As the worlds' two major economies, the EU and China should resist the temptation of protectionism, join hands to tide over the crisis, and contribute to the harmonious and sustained growth of world trade and investment.
(Xinhua News Agency August 17, 2009)
