The European Union's (EU) new anti-dumping rules will not be in full compliance with the European bloc's World Trade Organization (WTO) obligations, a leading European international trade lawyer told Xinhua in an interview.
The European Parliament's negotiating team and the EU ministers in Strasbourg struck an informal agreement on Tuesday on the EU's anti-dumping proposal, which was adopted by the European Commission in November 2016.
The new rules, introducing "significant market distortions" other than the "analogue country methodology" when calculating dumping margins, still need to get the green light by the International Trade Committee of the European Parliament on Oct. 12 and by the full house at the November plenary session in Strasbourg respectively.
Then after it is adopted by the Council of the European Union, the legislation is expected to enter into force before the end of the year.
The EU said in a statement the rules are formulated in a country-neutral way and in full compliance with the EU's WTO obligations.
"I do not believe so for even one minute," said Edwin Vermulst, a partner of the VVGB international law firm in Belgium, commenting on the statement.
Vermulst believed that the new methodology for calculating dumping margins is repackaged "non-market economy methodology."
"Although it appears to be non-discriminatory, it in fact continues to target China," he said.
According to Section 15 of China's WTO accession protocol, the trading partners of China must rely on the prices and costs of Chinese producers in the calculation of their dumping margin since the expiry of the 15 year-period after China acceded to the WTO.
In accordance with the accession protocol signed when China joined the WTO in 2001, the surrogate country approach expired on Dec. 11, 2016.
In other words, no more "analogue country methodology" or "non-market economy methodology" should be applied towards Chinese companies since Dec. 11 last year.
Vermulst told Xinhua the new rules go even further than the EU's cost adjustment practice in the Argentina and Indonesia biodiesel cases and such practice were already condemned by the WTO Appellate Body as being in violation of the WTO Anti-Dumping Agreement.
In the case of EU anti-dumping measures on biodiesel from Argentina, the WTO dispute settlement body has ruled the EU's practice of disregarding the respondent's cost of inputs due to distortion in the input market and replacing that with an undistorted benchmark to be incompatible with discipline of the WTO agreements.
Under the new methodology, the burden of proof to demonstrate the market distortion has shifted from exporting producers to the complaining EU industry and the investigating authority.
In order to help the EU industries to overcome the difficulties in assembling and producing such evidence, the Commission may make up its report describing the specific situation concerning the market distortion in a certain country or a certain sector. Such a report has the value of evidence, and thus can be relied upon by the EU industries in support of their complaints and claims.
Vermulst said the EU has already prepared a very thick report of more than 400 pages on distortions in the Chinese economy, so it seems extremely likely that, as soon as the new law is adopted, the report will be used as evidence for distortions.
"As you can imagine, as it was the Commission that prepared the report in the first place that then will have to decide whether distortions exist in a particular investigation," Vermulst said. "It will become a self-fulfilling prophecy."
Furthermore, he said the inclusion of labor and environmental standards as a relevant element (as a result of pressure from the European Parliament) introduces a new element in anti-dumping law and practice that no other WTO member has ever incorporated or used.