New report reveals that the changes in the EU's anti-dumping laws towards China are not working

A report written by Dr Robert MacLean, a former partner in our Brussels office specialising in international trade law, reveals that the European Union is still continuing to discriminate when carrying out anti-dumping investigations into exports from the PRC. The Report, published in this month’s Journal of International Trade Law and Regulation, shows that the changes made in 1998 to the EU’s anti-dumping policy, which were intended to allow Chinese manufacturers to get better results, are simply not working properly.

At the heart of the change in the EU’s policy was the creation of new rights for Chinese manufacturers and exporters to allow them to request so-called Market Economy Treatment (MET). This meant that, if individual Chinese enterprises could prove their operations took place outside the control of the Chinese government, more favourable treatment could be offered to allow them to seek individual dumping margins based on their own actual domestic and export prices. In theory, this approach should have resulted in a dramatic decrease in the dumping margins found in each individual case.

The reality over the last three years has been dramatically different. The three man conclusions of the Report are:

• Of over 45 applications for MET, only five Chinese companies managed to successfully prove their entitlement, equating to a success rate of only slightly more than 11%.
• The conditions for achieving market economy status, particularly as applied in practice, have proved hugely onerous to satisfy.
• For those Chinese enterprises successfully established their eligibility for MET, there is little evidence of the expected significant decline in their dumping margins.

In contrast, over the same period, the number of fresh anti-dumping investigations opened against Chinese products has increased significantly. In 1999, twelve new cases were started and six in the following year. Adding to this the figures for 2000, this means that more than 20 new investigations have been launched since the new policy was adopted. Chinese exporters might well be forgiven for believing that the changes in the European Community’s anti-dumping policy toward them over the last three years or so has in fact penalised them far more than giving them any tangible reward.

It should also be recalled that, for Hong Kong-based companies with manufacturing facilities in China, the same treatment is applied to their exports to the EU where the goods in question are manufactured in China. However, the EU has applied the new laws in such a way that Hong Kong investors in China, who only operate factories, as opposed to having a legal presence, are effectively excluded from being able to qualify for Market Economy Treatment. Hence, Hong Kong companies in this position will inevitably be subjected to higher dumping duties and, as a result, placed at a competitive disadvantage.

For more information and copies of the report, please contact David Marks on 020 7367 2136 or at david.marks@cms-cmck.com