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Adored and Despised in Equal Measure: An Assessment of the EU’s Principle of Market Economy Treatment in Anti-Dumping Investigations Against China

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European Yearbook of International Economic Law 2012

Part of the book series: European Yearbook of International Economic Law ((EUROYEAR,volume 3))

Abstract

Compared to the scale of the volume of trade in general between the EU and China, EU anti-dumping duties should be only a minor irritant in the trading relationship between the two sides. In theory, only a small volume of imports from China are covered by EU anti-dumping measures. Yet, despite this situation, the issue of recognition of China as a market economy country as a whole, and specifically the application of MET in EU anti-dumping actions directed against it, raises passions that seem quite disproportionate. It is therefore useful to try to empirically assess what is the real economic impact of the EU’s anti-dumping approach towards China in light of the use of the conditional MET principle.

In the interests of assessing objectivity and impartiality, the author declares that he has been engaged in material representations of interested parties in the following EU administrative and judicial proceedings involving cases mentioned in this Article. Administrative procedures: Coated Fine Paper from China (AD and AS); Certain Seamless Pipes of Iron and Steel from China (AD); Certain Iron and Steel Fasteners from China (AD); Stainless Steel Rolled-Cold Flat Products from China, Korea and Taiwan (AD); Sodium Metal from the USA (AD and AS); Monosodium Glutamate from China (AD); Citric Acid from China (AD); Canned Mandarins from China (AD); Certain Compressors from China (AD); Compact Recordable Disks (CD-Rs) from Malaysia, Hong Kong and China (AD); Candles from China (AD); Ironing Boards from China (AD); PSC Wires and Strands from China (AD); Certain Leather Footwear from China (AD); Plastic Bags and Sacks from China (AD); Compact Recordable Disks (CD-Rs) from India. Court procedures: ECJ/GC Cases T-300/04 and C-535/06 P, Moser Baer India vs. Council of the European Union; GC Case T-299/05, Shanghai Excell Precision Limited vs. Council of the European Union; GC Case T-274/07, Zhejiang Harmonic Hardware Products vs. Council of the European Union.

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Notes

  1. 1.

    This explanation is a simplification of the way the system applies and there are special rules where actual domestic prices are not used because the sales in question are not profitable, not representative, etc. In such a case, the EU constructs a normal value or domestic prices based on costs of production plus Selling, General and Administrative (SG&A) expenses plus a reasonable margin for profit. For the purposes of the present discussion, these special techniques are not particularly relevant.

  2. 2.

    In Regulation (EC) No. 1355/2008, OJ [2008] L 350/35, the European Commission used Spain as the analogue country for the purpose of establishing normal values in the absence of any other country in the world making these products except Spain and China.

  3. 3.

    The currently applicable EU Basic Anti-Dumping Regulation is Regulation (EC) No. 1225/2009, OJ [2009] L 343/51.

  4. 4.

    European Commission, 28th Annual Report to the European Parliament on Trade Defence Activities 2009, COM(2010) 558 Final, p. 5.

  5. 5.

    Eurostat, available at: http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Extra-EU_trade_in_goods.

  6. 6.

    Regulation (EC) No. 289/2009, OJ [2009] L 94/48; and Regulation (EC) No. 926/2009, OJ [2009] L 262/19.

  7. 7.

    Regulation (EC) No. 91/2009, OJ [2009] L 29/1.

  8. 8.

    Regulation (EC) No. 492/2008, OJ [2008] L 144/14; and Regulation (EC) No. 1187/2008, OJ [2008] L 322/1.

  9. 9.

    Russia was granted full MET Status in 2002 on the authority of Regulation (EC) 1972/2002, OJ [2002] L 305/1.

  10. 10.

    These investigations include: Regulation (EU) No. 1035/2010, OJ [2010] L 298/10; Regulation (EU) No. 248/2011, OJ [2011] L 67/1; Regulation (EU) No. 964/2010, OJ [2010] L 282/1; Regulation (EC) 1355/2008, OJ [2008] L 350/35; Regulation (EC) No. 1187/2008, OJ [2008] L 322/1; Regulation (EC) No. 91/2009, OJ [2009] L 29/1; Regulation (EC) No. 926/2009, OJ [2009] L 262/19; Regulation (EC) No. 925/2009, OJ [2009] L 262/1; Regulation (EC) No. 703/2009, OJ [2009] L 203/1; Regulation (EC) No. 691/2007, OJ [2007] L 160/1; Regulation (EC) 383/2009, OJ [2009] L 118/1; Regulation (EC) No. 1338/2006, OJ [2006] L 251/1; Regulation (EC) No. 1136/2006, OJ [2006] L 205/1; Regulation (EC) No. 1472/2006, OJ [2006] L 275/1; Regulation (EC) No. 1425/2006, OJ [2006] L 270/4; and Regulation (EC) No. 1987/2005, OJ [2005] L 320/1.

  11. 11.

    Regulation (EC) No. 128/2005, OJ [2005] L 25/16; Regulation (EC) No. 1174/2005, OJ [2005] L 189/1.

  12. 12.

    Regulation (EC) No. 553/2006, OJ [2006] L 98/3, Recital 143; Regulation (EC) No. 1472/2006, OJ [2006] L 275/1, Recital 146.

  13. 13.

    Ironing Boards from China, European Commission – Final General Disclosure Document dated 20th February 2007.

  14. 14.

    GC Case T-206/07, Foshan Shunde Yongjian Housewares & Hardware vs. EC Council, [2008] ECR II-1; ECJ Case C-141/08 P, Foshan Shunde Yongjian Housewares & Hardware vs. EC Council, [2009] ECR I-9147; and GC T-274/07, Zhejiang Harmonic Hardware Products Co. Ltd vs. EC Council, application on 19th July, 2007, case still pending, summary in OJ [2007] C 223/15.

  15. 15.

    Regulation (EC) No. 1425/2006, OJ [2006] L 270/4, Recitals 83–131.

  16. 16.

    Regulation (EC) No. 1259/2005, OJ [2005] L 200/73, Recitals 14–47.

  17. 17.

    Regulation (EC) No. 91/2009, OJ [2009] L 29/1, Recitals 58–111; Regulation (EC) No. 289/2009, OJ [2009] L 94/48, Recitals 20–52; and Regulation (EC) No. 492/2008, OJ [2008] L 144/14, Recitals 15–43.

  18. 18.

    Decision of the WTO Ministerial Conference of 10th November, 2001 Concerning the Accession of the People’s Republic of China, WTO Doc WT/L/432, 23rd November, 2001.

  19. 19.

    For an EU anti-dumping ruling applying this interpretation see Regulation (EC) No. 1472/2006, OJ [2006] L 275/1, Recital 75.

  20. 20.

    Report of the Panel, EC – Definitive Anti-Dumping Measures on Certain Iron and Steel Fasteners from China, WT/DS 397/R.

  21. 21.

    For a discussion of this case, see Healy/Azau, The EU’s Practice Relating to Imports from NME Countries: An Examination of the WTO Panel’s Report in the Chinese Iron and Steel Fasteners Case”, International Trade Law and Regulation 17 (2011) 2, p. 70.

  22. 22.

    Commission Communication “Treatment of Former Non-Market Economies in Anti-Dumping Proceedings”, COM(97) 677 Final, pp. 1–2.

  23. 23.

    Regulation (EC) No. 1972/2002, OJ [2002] L 305/2, and Regulation (EC) No. 2117/2005, OJ [2005] L 340/17.

  24. 24.

    European Commission, Staff Working Document on Progress by the PRC Towards Graduation to Market Economy Status in Trade Defence Investigations, SEC(2008) 2508 Final, p. 5.

  25. 25.

    European Commission, 28th Annual Report to the European Parliament on Trade Defence Activities 2009, COM(2010) 558 Final, p. 3.

  26. 26.

    European Commission, Staff Working Document on Progress by the PRC Towards Graduation to Market Economy Status in Trade Defence Investigations, SEC(2008) 2508 Final.

  27. 27.

    See Commission Communication, Treatment of Former Non-market Economies in Anti-Dumping Proceedings, COM(97) 677 Final, pp. 4–11; and European Commission, Review of the Anti-Dumping Regime Applicable to Russia and China, COM(2000) 363 Final, pp. 5–9.

  28. 28.

    See fn. 26, supra.

  29. 29.

    The amendments were originally made by Regulation (EC) No. 905/98, OJ L 128/18; and Decision 1000/1999/ECSC, OJ [1999] L 122/35, amending Art. 2(7) of Regulation (EC) No. 384/96.

  30. 30.

    This has been confirmed by the EU General Court in case in GC Case T-299/05, Shanghai Excell M&E Enterprise Co. Ltd and Shanghai Adeptech Precision Co. Ltd vs. EC Council, [2009] ECR II-573, para. 76; and GC Case T-35/01, Shanghai Teraoka Electronic vs. EC Council, [2004] ECR II-3663, para. 54.

  31. 31.

    Footwear with Protective Toecaps from China and India [Termination Decision], OJ [2006] L 234/3.

  32. 32.

    See, for example, Regulation (EC) No. 91/2009, OJ [2009] L 29/1, Annex I (110 Co-operating Exporting Producers Not Included in the Sample); and Regulation (EC) No. 1472/2006, OJ [2006] L 275/1, Annex I (141 Co-operating Exporting Producers Not Included in the Sample).

  33. 33.

    GC Case T-401/06, Brosmann Footwear (HK) Limited and Others vs. EC Council, [2010] ECR II-00000, Paras. 59–98.

  34. 34.

    Report of the Panel, EC – Definitive Anti-Dumping Measures on Certain Iron and Steel Fasteners from China, WT/DS 397/R, 3rd December, 2010, paras. 7.566–7.579.

  35. 35.

    The first instance of this revised practice occurred in Regulation (EU) No. 404/2010, OJ [2010] L 117/64, Recitals 5–9. See also Regulation (EU) No. 138/2011, OJ [2011] L 43/9; and Commission Notice of Initiation 2010/C 343/18, OJ [2010] C 343/24.

  36. 36.

    Regulation (EU) No. 1042/2010, OJ L [2010] 299/7, Recital 33.

  37. 37.

    Regulation (EU) No. 1035/2010, OJ [2010] L 298/10, Recital 28.

  38. 38.

    See, for example, Regulation (EU) No. 1042/2010, OJ L [2010] 299/7, Recital 51.

  39. 39.

    Art. 16 EU Basic Anti-Dumping Regulation.

  40. 40.

    Regulation (EC) No. 306/2004, OJ [2004] L 52/5, Recital 53.

  41. 41.

    The European Commission originally proposed that this assessment should be made within month of initiation but this was changed to 3 months in the final version of the amendments made to the EU’s Basic Anti-dumping Regulation – see Commission Communication, Treatment of Former Non-Market Economies in Anti-Dumping Proceedings, COM(97) 677 Final, 12th December, 1997, p. 12.

  42. 42.

    Regulation (EC) No. 128/2005, OJ [2005] L 25/16, Recitals 27–29.

  43. 43.

    GC Case T-299/05, Shanghai Excell M&E Enterprise Co. Ltd and Shanghai Adeptech Precision Co. Ltd vs. EC Council, [2009] ECR II-573, paras. 113–146.

  44. 44.

    GC Case T-138/02, Nanjing Metalink International Co. Ltd vs. EC Council, [2006] ECR II-4347, paras. 43–44.

  45. 45.

    See Section 1.B.2 above.

  46. 46.

    Regulation (EC) No. 452/2007, OJ [2007] L 109/12, Recital 9.

  47. 47.

    Regulation (EU) No. 1243/2010, OJ [2010] L 338/22. This case is now under appeal to the EU General Court, GC Case T-156/11, Since Hardware (Guangzhou) Co. Ltd vs. EU Council, application submitted on 15th March, 2011, OJ [2011] C 120/18.

  48. 48.

    This “channelling” of exports through related companies with different duty rates is something that the EU prevents at all costs against all non-EU enterprises, not only those located in China.

  49. 49.

    Regulation (EC) No. 2605/2000, OJ [2000] L 301/42, Recital 46.

  50. 50.

    Regulation (EC) No. 988/2004, OJ [2004] L 181/5, Recital 29.

  51. 51.

    Regulation (EC) No. 1043/2000, OJ [2000] L 118/6, Recital 13.

  52. 52.

    Regulation (EC) No. 1472/2006, OJ [2006] L 275/1, Recitals 71–72.

  53. 53.

    Regulation (EC) No. 837/2000, OJ [2000] L 102/15, Recital 28.

  54. 54.

    Commission Decision No. 1238/2000/ECSC, OJ [2000] L 141/9, Recital 27.

  55. 55.

    Certain Iron and Steel Fasteners from China [Definitive Measures], supra fn. 13, Recitals 63–69.

  56. 56.

    Regulation (EC) No. 287/2009, OJ [2009] L 94/17, Recital 32.

  57. 57.

    Regulation (EC) No. 1551/2006, OJ [2006] L 287/3, Recital 23.

  58. 58.

    Regulation (EC) No. 1331/2007, OJ [2007] L 296/1, Recital 23; and Regulation (EC) No. 862/2005, OJ [2005] L 144/11, Recital 33.

  59. 59.

    Regulation (EU) No. 1035/2010, OJ [2010] L 298/10, Recitals 20–24.

  60. 60.

    Decision No. 1238/2000/ECSC, OJ [2000] L 141/9, Recital 27.

  61. 61.

    GC Case T-498/04, Zhejiang Xinan Chemical Industrial Group vs. EC Council, [2009] ECR II-1969, summary report in OJ [2009] C 180/42.

  62. 62.

    Regulation (EC) No. 289/2009, OJ [2009] L 94/48, Recital 27.

  63. 63.

    Regulation (EC) No. 538/2005, OJ [2005] L 89/4, Recitals 46–49.

  64. 64.

    Regulation (EC) No. 306/2004, OJ [2004] L 52/5, Recitals 60–64.

  65. 65.

    Regulation (EC) No. 862/2005, OJ [2005] L 144/11, Recitals 33–34.

  66. 66.

    Regulation (EU) No. 258/2011, OJ [2011] L 70/5, Recital 38.

  67. 67.

    Regulation (EC) No. 552/2005, OJ [2005] L 93/6, Recital 25.

  68. 68.

    Frozen Strawberries from China, supra fn. 67, Recital 23.

  69. 69.

    Regulation (EC) No. 128/2005, OJ [2005] L 25/16, Recital 26.

  70. 70.

    Regulation (EC) No. 960/2003, OJ [2003] L 138/1, Recitals 38–44.

  71. 71.

    GC Case T-300/03, Moser Baer India Limited vs. Council of the European Union, [2006] ECR II-3911, paras. 65–70, and on appeal, ECJ Case C-535/06 P, Moser Baer India Limited vs. Council of the European Union, [2009] ECR I-7051, paras. 28–43.

  72. 72.

    Since 2005 only listed EU companies must prepare their consolidated financial statements in accordance with the IFRS. Member States may also permit or require EU-listed companies to use this standard for their annual accounts and non EU-listed companies for their annual and/or consolidated accounts.

  73. 73.

    GC Case T-299/05, Shanghai Excell M&E Enterprise Co. Ltd and Shanghai Adeptech Precision Co. Ltd vs. EC Council, [2009] ECR II-573, paras. 86, 87.

  74. 74.

    Regulation (EC) No. 552/2005, OJ [2005] L 93/6, Recital 27.

  75. 75.

    Regulation (EC) No. 397/2004, OJ [2004] L 66/1, Recital 38.

  76. 76.

    Regulation (EC) No. 862/2005, OJ [2005] L 144/11, Recital 36.

  77. 77.

    Regulation (EC) No. 837/2000, OJ [2000] L 102/15, Recitals 28, 29.

  78. 78.

    Regulation (EC) No. 771/2005, OJ [2005] L 128/19, Recital 35.

  79. 79.

    Regulation (EC) No. 449/2000, OJ [2000] L 55/3, Recital 114.

  80. 80.

    Regulation (EC) No. 306/2004, OJ [2004] L 52/5, Recitals 67, 68.

  81. 81.

    Regulation (EC) No. 1551/2006, OJ [2006] L 287/3, Recital 25.

  82. 82.

    Regulation (EC) No. 145/2005, OJ [2005] L 27/4, Recital 22.

  83. 83.

    Regulation (EC) No. 771/2005, OJ [2005] L 128/19, Recital 37.

  84. 84.

    Regulation (EC) No. 452/2007, OJ [2007] L 109/12, Recital 25.

  85. 85.

    Regulation (EC) No. 692/2005, OJ [2005] L 112/1, Recital 16.

  86. 86.

    Regulation (EC) No. 538/2005, OJ [2005] L 89/4, Recital 56.

  87. 87.

    Regulation (EC) No. 988/2004, OJ [2004] L 181/5, Recital 30.

  88. 88.

    Regulation (EC) No. 1472/2006, OJ [2006] L 275/1, Recital 74.

  89. 89.

    Regulation (EC) No. 862/2005, OJ [2005] L 144/11, Recital 37.

  90. 90.

    Regulation (EC) No. 1350/2006, OJ [2006] L 250/10, Recital 19.

  91. 91.

    Regulation (EC) No. 781/2003, OJ [2003] L 114/16, Recital 25.

  92. 92.

    Regulation (EC) No. 1551/2006, OJ [2006] L 287/3, Recital 26.

  93. 93.

    Regulation (EC) No. 781/2003, OJ [2003] L 114/16, Recital 21.

  94. 94.

    Regulation (EU) No. 1042/2010, OJ [2010] L 299/7, Recital 37.

  95. 95.

    Regulation (EC) No. 255/2001, OJ [2001] L 38/8, Recital 18.

  96. 96.

    Regulation (EC) No. 1612/2001, OJ [2001] L 214/3, Recital 21.

  97. 97.

    Regulation (EC) No. 1472/2006, OJ [2006] L 275/1, Recital 75.

  98. 98.

    Regulation (EC) No. 771/2005, OJ [2005] L 128/19, Recital 39.

  99. 99.

    Regulation (EC) No. 287/2009, OJ [2009] L 94/17, Recital 36.

  100. 100.

    Regulation (EC) No. 390/2007, OJ [2007] L 97/6, Recital 75.

  101. 101.

    Regulation (EC) No. 488/2008, OJ [2008] L 143/13, Recital 26.

  102. 102.

    Regulation (EU) No. 1042/2010, OJ [2010] L 299/7, Recital 39.

  103. 103.

    Regulation (EC) No. 492/2008, OJ [2008] L 144/14, Recital 24.

  104. 104.

    Regulation (EC) No. 1551/2006, OJ [2006] L 287/3, Recital 26.

  105. 105.

    Regulation (EC) No. 862/2005, OJ [2005] L 144/11, Recital 39.

  106. 106.

    Regulation (EC) No. 488/2008, OJ [2008] L 143/13, Recital 25.

  107. 107.

    Regulation (EC) No. 289/2009, OJ [2009] L 94/48, Recital 25; and Regulation (EU) No. 404/2010, OJ [2010] L 117/64, Recital 44.

  108. 108.

    Regulation (EC) No. 488/2008, OJ [2008] L 143/13, Recital 28 and Regulation (EC) No. 1425/2006, OJ [2006] L 270/4, Recital 104.

  109. 109.

    Regulation (EC) No. 1551/2006, OJ [2006] L 287/3, Recital 24.

  110. 110.

    Regulation (EU) No. 1042/2010, OJ L [2010] 299/7, Recitals 47–49.

  111. 111.

    Report of the Panel, US – Definitive Anti-Dumping and Countervailing Duties on Certain Products From China, WT/DS 379/R, 22nd December, 2010, paras. 14.67–14.76.

  112. 112.

    Regulation (EU) No. 452/2011, OJ [2011] L 128/18, Recitals 269–274.

  113. 113.

    The results of the EU anti-dumping investigation can be found in Regulation (EU) No. 452/2011, OJ [2011] L 128/18.

  114. 114.

    Regulation (EC) No. 1612/2001, OJ [2001] L 214/3, Recital 22.

  115. 115.

    Commission, Staff Working Document on Progress by the PRC Towards Graduation to Market Economy Status in Trade Defence Investigations, SEC(2008) 2508 Final, 19th September, 2008, pp. 16–17.

  116. 116.

    Regulation (EC) No. 988/2004, OJ [2004] L 181/5, Recital 32.

  117. 117.

    Regulation (EC) No. 862/2005, OJ [2005] L 144/11, Recital 39.

  118. 118.

    Regulation (EC) No. 538/2005, OJ [2005] L 89/4, Recital 62.

  119. 119.

    Ibid.

  120. 120.

    Regulation (EC) No. 128/2005, OJ [2005] L 25/16, Recital 32; Regulation (EC) No. 692/2005, OJ [2005] L 112/1, Recital 17.

  121. 121.

    Commission Notice of Initiation 2010/C 99/13, OJ [2010] C 99/30; and Commission Notice of Initiation 2010/C 249/08, OJ [2010] C 249/7.

  122. 122.

    Regulation (EU) No. 452/2011, OJ [2011] L 128/18, Art. 2(2).

  123. 123.

    In the Council’s minutes attached to the 2000 Proposed Council Regulation to amend the EU Basic Anti-Dumping Regulation, COM(2000) 363 final, Annex 1), the Council called on the European Commission “to implement this Regulation in such a way that firms of all sizes have equivalent opportunities to make use of its provisions if they fulfil all the necessary criteria”.

  124. 124.

    Ironing Boards from China [Provisional Disclosure Document dated 26th February, 2007], not public.

  125. 125.

    The EU General Court has supported the Commission’s policy on this issue – see GC Case T-299/05, Shanghai Excell M&E Enterprise Co. Ltd and Shanghai Adeptech Precision Co. Ltd vs. EC Council, [2009] ECR II-573, paras. 72 and 88.

  126. 126.

    See, for example, Decision 2009/452/EC, OJ [2009] L 149/74.

Acknowledgment

The author wishes to thank Haiya Wo at Squire Sanders Dempsey (UK) LLP for her assistance in providing research support for this project.

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    Robert M. MacLean

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  1. European Law, European and, University of Passau Chair for Constitutional and Administrat, Passau, Germany

    Christoph Herrmann

  2. Department of European Law, University of Hamburg, Hamburg, Germany

    Jörg Philipp Terhechte

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MacLean, R.M. (2012). Adored and Despised in Equal Measure: An Assessment of the EU’s Principle of Market Economy Treatment in Anti-Dumping Investigations Against China. In: Herrmann, C., Terhechte, J. (eds) European Yearbook of International Economic Law 2012. European Yearbook of International Economic Law, vol 3. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-23309-8_6

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