EU shoots itself in foot by turning to trade protectionism

Updated 2017-01-30 14:43:13 Xinhua

The European Union (EU) is shooting itself in the foot as it has decided to impose higher anti-dumping rules on Chinese steel products, a clearly protectionist move.

The European Commission on Friday decided to levy anti-dumping duties on stainless steel pipe products manufactured by Chinese businesses for a five-year period, with duties ranging between 30.7 percent and 64.9 percent.

The move violates World Trade Organization (WTO) rules because the European Commission in its investigation continued to use the unfair and unreasonable surrogate country approach which has been seriously affecting Chinese companies' interests and should be abandoned after Dec. 11 under WTO rules.

China should not be blamed for the difficulties facing the EU's steel sector. The fact that the EU shouldn't deny is that the slowdown in global economic growth and declining market demand were the fundamental reasons for difficulties facing the iron and steel sector.

As a result, steel sector overcapacity is a global challenge that all countries concerned are responsible for.

Figures also show that over the past 10 years, China has only exported about ten percent of its total steel output, a figure much lower than that of some major steel exporting countries. Moreover, China's low value-added steel products complement the EU's steel market portfolio.

The solar panel case is a classic example of the EU's trade protectionism against China hurting its own industry as well.

Recently, 18 EU member states have rejected the European Commission's proposal to extend tariffs on Chinese solar panels for another two years.

It's the first time the EU's executive arm has been rebuffed since its powers to impose anti-dumping tariffs were fortified three years ago.

Spokesperson of Solar Alliance for Europe (SAFE) Holger Krawinkel has criticized the Commission in a statement and described its investigation result as "built on sand."

He cited an analysis as saying that Chinese producers not only benefit from economies of scale, but also from the regional supply chain and high degree of standardization, all of which lead to the low cost of Chinese products.

A European Commission report admitted that European solar module and cell manufacturers have not benefited from the trade barrier, while SAFE also confirmed the finding as its members' sales volumes and market shares have dropped further in the last three years.

It is a welcome fact that a majority of EU member states have accepted "free trade is the only reasonable solution" for Europe's solar industry and climate targets, Krawinkel said.

China is the EU's second-largest trading partner, with daily bilateral trade exceeding 1 billion euros (1.07 billion U.S. dollars) with tremendous benefits.

The EU should restrain itself from taking protectionist measures against China as it may dampen the sound momentum of the development of China-EU ties.

It's clear that trade protectionism will backfire. Just as Chinese President Xi Jinping has said, pursuing protectionism is just like locking oneself in a dark room. While wind and rain may be kept outside, so are light and air. No one will emerge as a winner in a trade war.

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