Old Wine in a New Bottle: The EU's Response to the Expiry of Section 15(a)(ii) of China's WTO Protocol of Accession

Abstract

Following the expiry, on 11 December 2016, of the second paragraph of Section 15(a) of China's Protocol of Accession to the WTO, importing WTO Members no longer find a legal basis in in Section 15 for using so-called non-market economy (NME) methodologies for determining the normal value of Chinese imports. Hence, investigating authorities now have to rely exclusively on the provisions of the Anti-Dumping Agreement (ADA) when investigating imports from China. On 9 November 2016, the European Commission adopted a proposal to amend its basic Anti-dumping Regulation in view of the expiry of Section 15(a)(ii). According to the proposed amendments, the Regulation would no longer explicitly discriminate between WTO Members by mandating NME treatment for certain countries, among which China. It would, instead, allow the Commission to employ an NME-like methodology with regard to imports from any WTO Member, where it had determined that it would not be “appropriate to use domestic prices and costs in the exporting country due to the existence of significant distortions”. This paper analyzes the compatibility of the proposed new methodology with the provision of the ADA, in light of the recent reports delivered by the Appellate Body and the Panel in EU – Biodiesel. It is submitted that even though the envisaged amendments could possibly shield the Regulation from an 'as such' claim of WTO-inconsistency, the use of the proposed methodology is unlikely to be allowed by the ADA.