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EU seeking trade ties with China
Published: 05.06.2017 | Dubai, United Arab Emirates
While the bloc and the world’s second-largest economy move towards strengthening trade ties, the 28-nation club is keen to make it clear that it will not be slow to impose heavy penalties on Chinese firms selling products at below cost on the continent.
As the European Union forges closer ties with China, the bloc is also moving to calm concern that Chinese exporters will destroy EU-based industries ranging from steel to solar. The EU will retain the scope to impose hefty levies against Chinese businesses that sell goods below cost in Europe under a planned tariff overhaul, according to Salvatore Cicu, an Italian member of the European Parliament.
EU China|Meyer-Reumann
Europe is revamping the way it calculates duties on these “dumped” imports in response to long-standing Chinese demands for more favourable trade treatment. “We want to give a message – especially to China – that we are open for trade, but EU industries mustn’t be penalised,” says Mr Cicu, who is steering a draft law on the controversial issue through the 28-nation parliament, at the assembly’s headquarters in Strasbourg, France. “We can find an effective compromise.”

At a June 1-2 meeting in Brussels, Chinese and European leaders continued to chart a path to closer trade and investment ties. The EU is seeking to create stronger international bonds without reigniting a populist wave in Europe that rallied against globalism’s negative effects on domestic industries and workers.
Meanwhile, the bloc is telling China that more open trade with Europe first requires fewer barriers to foreign investment in the Chinese market. After the Chinese president Xi Jinping used the Davos forum of global business and political elites in January to portray his country as a champion of free markets, the EU trade commissioner Cecilia Malmstrom said she was still looking for results.

“We are all waiting now for the remarks by the president to translate into action and make trade and investment more open,” Ms Malmstrom told an EU-China business conference in Brussels on June 2.
Disagreements over trade prevented both sides from drawing up as planned their first-ever statement on climate change and clean energy at the summit, according to an EU official, who said the discord over commercial matters had no impact on the unity over global warming. Ambassador Yang Yanyi, the head of the Chinese mission to the EU, told China’s official Xinhua News Agency before the summit that some differences between the two regions may arise while others fall away but “the key is to understand how to manage and handle these differences properly”.

Mr Cicu, a native of Sicily serving his first term as an EU policymaker, says European industries have little to fear from the planned overhaul of the bloc’s system for determining anti-dumping duties. At stake is the level of European import levies on billions of euros of goods.
While it is the EU’s second-biggest trade partner after the United Sttes, China is grouped with the likes of Belarus and North Korea in lacking market-economy designation by Europe and faces more European anti-dumping duties than any other country.

After years of stalling, the EU moved to upgrade China’s status in November when Ms Malmstrom proposed to elevate the country’s classification in dumping cases. A final EU agreement is likely to be reached by yearend, according to Mr Cicu. The next step is a June 20 vote in the EU parliament’s trade committee on amendments he is proposing.
“We are confident of finding a convergence of views,” Mr Cicu says. “If we manage this properly, it won’t be so bad for the European industry.”
To limit a flood of cheap imports from China, the EU has included in the draft law a formula for calculating anti-dumping duties against countries whose markets are deemed to have “significant distortions” from state intervention. A related provision would allow the European Commission, the EU’s Brussels-based trade authority, to report on regional distortions, aiding European industries when filing dumping complaints.

After the June 20 vote in the EU parliament’s trade committee, Mr Cicu plans to start negotiations on a final deal with representatives of the bloc’s national governments, which have already reached a deal among themselves.
Asked how one of the most politically toxic EU policy questions in years could suddenly seem ripe for settlement, Mr Cicu cites cool heads, widespread consultations and the value of two decades he spent in the Italian parliament and government before joining the European legislature in 2014.

“Twenty years of political experience is a way to manage hot potatoes,” he says with a smile.
Separately, the EU warned the United States last week that its investigation into US steel imports should be limited to issues of national security and not result in unjustified, sweeping measures on exporting nations. The US president Donald Trump launched a trade investigation in April against China and other exporters of steel into the US market, under a law that allows presidents to impose restrictions on imports for reasons of US national security.

In a written submission to the US department of commerce, the European Commission said that restrictive actions based on national security could not provide the lasting solution that the steel market needs.
“On the contrary, their impact may create further distortions at global level with negative consequences, ultimately affecting the position of US companies – both steel producers and also US manufacturers which use steel,” the submission to the US investigation hearing says. The commission says that US steel imports might be higher year-on-year, but had decreased by about 25 per cent between 2014 and 2016, with anti-dumping and anti-subsidy duties limiting Chinese products.

The study, it says, should be limited to the issue of national security, adding that only about 3 per cent of US steel demand was used for national defence and homeland security purposes.
A commission spokesman says there is no evidence that imports, and certainly those from the EU, threatened US national security. “Overcapacity is the root cause of the problems in the steel sector and only by working together can we find a solution and bring back fairness to the market and ensure a level playing field for our producers and workers,” he says. The US commerce secretary Wilbur Ross has until early next year to prepare a report for the president, who can then take action to “adjust the imports”.

Mr Trump’s principle target would appear to be China, the world’s largest steel producer, the subject of a pre-election pledge to crack down on Chinese trade practices. The Chinese premier Li Keqiang arrives in Brussels on Thursday and is expected to commit with the European Union to the Paris climate accord and to address steel overcapacity “at its roots”.
We are confident of finding a convergence of views Salvatore Cicu Italian member of the European Parliament.
 
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