The Future of EU Trade Defence Investigations against Imports from China

Abstract

China’s ‘Non-Market Economy’ (NME) status, under which the EU may, prima facie, reject the appropriateness of domestic Chinese prices in the calculation of anti-dumping duties, has sustained consistent criticism and constitutes one of the most contentious issues in EU–Chinese bilateral relations. Despite claims to the contrary, the EU may no longer have recourse to the NME methodology after 11 December 2016, by virtue of the expiration of a key provision in China’s Accession Protocol to the World Trade Organization (WTO). Since some of the underlying concerns that triggered the creation of this provision may persist following December 2016, the EU may resort to other alternative methods. Firstly, the European Commission has often used the cost construction method under the Anti-Dumping Agreement to counteract NME like situations. However, the recent ruling of the panel in EU—Biodiesel has found this method to be largely incompatible with WTO law. Secondly, China’s Accession Protocol provides for special benchmarking and state owned enterprises provisions in the context of subsidy investigations that may serve as a means to counteract government subsidization. Thirdly, safeguards could also provide for an alternative method to counteract sharp unforeseen increases of imports causing or threatening to cause serious injury to Union producers. These alternative methods will likely replace the current NME methodology as a major source of contention between the EU and China.