European trade experts say trade protectionism hurts all

Updated 2017-06-02 11:07:54 Xinhua
The 1,000th freight train linking China and Europe this year departs from the Yiwu West Railway Station in Yiwu, east China's Zhejiang Province, May 13, 2017. (Xinhua/Gong Xianming)

The 1,000th freight train linking China and Europe this year departs from the Yiwu West Railway Station in Yiwu, east China's Zhejiang Province, May 13, 2017. (Xinhua/Gong Xianming)

Trade protectionism hurts all and reduces the overall economic well-being as consumers and downstream businesses must pay a higher cost for the same goods or raw materials, European trade experts has told Xinhua.

"It would be far more beneficial for the European Union (EU)'s competitiveness and for European consumers if the EU limits the use of Trade Defense Instruments(TDI) to its indispensable minimum," said Christian Verschueren, director-general of EuroCommerce, the EU's trade representative group for retail and wholesale.

On May 3, EU member states agreed on new anti-dumping rules containing a revised methodology for calculating dumping prices. The new rules were proposed by the European Commission last November.

Currently, EU anti-dumping investigations are based on market economy and non-market economy lists. In non-market economies, investigators identify dumping activities by comparing the export prices with those in a third country, also known as a "surrogate country", rather than with domestic prices in the exporting country as is the case of market economies.

In the new methodology, the surrogate country approach is replaced by a so-called "significant market distortion" concept. It enables EU investigators to correct "significant market distortions" by setting prices based either on prices in a third country with economic development levels similar to those of the country under investigation or on "international undistorted prices."

It does not virtually cease the surrogate country approach. Instead, it intends to continue using it in a disguised way and that could lead to even higher duties on a third country's producers, said Bao Yongqing, international trade lawyer from Steptoe & Johnson LLP Brussels office.

Obviously, trade protectionism will reduce the overall economic well-being because consumers and downstream businesses must pay a higher cost for the same goods or raw materials, Bao said.

"The ones suffering from steel duties in the first place are clearly the EU steel importers and wholesalers. At the end of the day, however, the bill will be for the final consumer to pay," Verschueren told Xinhua in a recent interview, adding that his organization will continue to favor free and fair trade.

Verschueren said the EU's TDI system has in fact gone beyond its legitimate scope, and certain sectors in the EU rely on anti-dumping duties as a last resort or "a life insurance in the stormy seas of the world market."

He called on the EU not to focus on artificially protecting less competitive sectors, saying affordable steel prices are in Europe's own interest.

In his view, EU steel producers will benefit from the new calculation methodology and a shorter investigation time cut from nine months to seven months.

Brandishing the stick of TDI, Verschueren said, will not solve the "real bread and butter issue" for the EU steel industry, which is to enhance domestic producers' genuine competitiveness. He said the EU needs to "complete some homework internally."

"It would be unfair to expect importers and consumers in the EU to pay the bill for possible shortcomings in other areas, be it at company or policy level," Verschueren said.

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