Yesterday, the European Parliament's trade committee voted for more robust anti-dumping measures to defend EU jobs & business from unfair competition. Jude Kirton-Darling, Labour MEP for the North East, is a member of the committee - here are her thoughts on these recent developments:
For years the European industry has suffered the brunt of China’s strength. But beyond fair competition, China has also been engaging in illegal trading practices: when selling exports below production price, a practice known as dumping, China is breaching global trading rules. This has led to catastrophic consequences for EU industries such as steel as we saw on Teesside with the closure of the Redcar steelworks.
The EU has not been inactive. Thanks to the involvement of producers, unions and MEPs, and despite of the opposition of the Tory government, a series of trade defence measures have been taken to correct the price of Chinese exports and make competition fairer.
The imposition of effective trade defence measures was made possible because China is not recognised as a “market economy” by the EU: in China, prices and production levels in most sectors are set by the government, not by market forces. But the entire EU trade defence system was threatened in December last year, not because China suddenly became a free market but because of changes in World Trade Organisation’s rules. As of today, the EU can no longer discriminate between “market” and “non-market” economies.
This led the European Commission to propose a revision of EU rules to ensure that even without this distinction higher anti-dumping duties than normal could still be taken against countries like China which don’t play by the same economic rules. The trick is to define a new, more objective methodology based on evidence of “significant distortions” rather than the “non-market” economy label.
However trade unions and producers raised concerns that the Commission proposal would indeed result in lower trade defences, and make their use more difficult. For example, the proposed system would revert the burden of the proof. This means that EU producers would be responsible for proving that their competitors are dumping, when in the previous system it was the responsibility of the exporter to prove that it respects the rules.
Yesterday, the European Parliament’s trade committee adopted a series of amendments to correct all of these shortfalls. Thanks to cross-party cooperation, involving all political groups expect for UKIP which refused to engage and voted against, the European Parliament has taken a very strong position in favour of strong trade defences, in full compliance with the WTO. We’ve closed the loopholes and even proposed to include social, environmental and tax dumping as a reason for deploying stronger duties.
In the EU, member states always have a say, and MEPs and ministers must now come to an agreement and the final terms of the reform. We’ll hopefully be able to reach a satisfactory outcome, although we expect some opposition from some governments, crucially the UK's.
This is yet another example of what the EU is doing concretely to protect jobs in our region. We will leave the EU, but this does not mean we have to abandon all of its features. Trade defence is certainly one to think about as the Brexit are starting.