China hits a steel barrier

Members of the European Parliament (MEPs) have passed a nonlegislative resolution stating that China’s exports to the European Union (EU) must be treated in a “nonstandard” way “until China has fulfilled the EU’s five criteria for market economy status. The resolution was passed in the European Parliament by a vote of 546 to 28, with 77 abstentions.

According to a press release issued by the MEPS, “This nonstandard methodology, for use in anti-dumping and anti-subsidy investigations, should assess whether China’s costs and prices are market-based, so as to ensure a level playing field for EU industry and defend EU jobs.”

Supporters of the resolution say that that 56 of the EU’s current 73 anti-dumping measures apply to imports from China, with many of those pertaining to steel and other metals. China’s excessive production of steel is considered by many critics as the predominant reason for steel and ferrous scrap prices that have been trending downward most of the past two years.

For the resolution to mean anything, the MEPS acknowledge that “the EU must to find a way to [follow a nonstandard protocol] in compliance with its international obligations in the World Trade Organization (WTO), and in particular China’s WTO Accession Protocol, which provides for changes in how China is to be treated after 11 December 2016.”

Brussels-based steelmaking organization EUROFER has expressed support for the resolution. “The message from the European Parliament has been abundantly clear: A significant majority of MEPs do not believe it is the right time to grant China market economy status,” says EUROFER Director General Axel Eggert. “China is not a market economy, and thus cannot be treated as such for the purpose of anti-dumping investigations.”

Of the 37 anti-dumping measures currently in force on steel in the EU, 16 involve China in some way, according to EUROFER. The group adds “Were market economy status to be granted, the EU’s trade defense measures would be rendered ineffective, with no other enforcement tool available.”