Consumers to have a greater say on duties

Date: 28/11/1996

By Elizabeth Wise

EUROPEAN consumers and processing industries, whose interests have long taken a back seat to those of producers, may finally be given a more powerful voice in the formulation of EU import policy.

The European Commission is reconsidering how the Union applies its powerful anti-dumping rules, which often bar foreign imports that are undercutting EU suppliers - even if they would benefit consumers.

Officials working for Trade Commissioner Sir Leon Brittan are now considering new 'guidelines' for measuring the damage caused to the EU by cheap imports. They hope to complete their 'reflection' on how the Commission interprets a key criterion used in damage assessment - that of 'Community interest' - by Christmas.

In addition to considering the impact on competing Union producers when deciding whether to stem the flow of an import on to EU markets, the Commission and Council of Ministers are required to take into account the interests of consumers and 'users' (EU industries which take the imported goods for further processing).

Until now, however, most dumping decisions have been based on a simple argument: if imports at unfairly low prices hurt European producers of the same goods, they should be curbed.

Commission officials now say they are trying to broaden that perspective to improve Europe's competitiveness at all stages of the production chain.

Some industries rely on cheap imported parts to maintain a profit margin and save jobs. If they cannot get them, they may go out of business or move production abroad.

“In some cases, imposing a duty will not protect industry A, but will chase industry B outside the Union,” said an official.

In two current anti-dumping cases, relating to Chinese ring-binder mechanisms and unbleached cotton from Egypt and India, EU firms making binders and clothing are arguing that they should not be denied continued access to the cheap foreign materials.

Free-traders also maintain that European producers should face foreign competition to prevent them from abusing dominant positions.

The Commission has no plans to alter the anti-dumping rules, but hopes that by subtly changing the way they are applied, it can promote productivity and competitiveness in the Union.

“The new thinking will add weight to the consumer interest side of the balance,” said a Commission trade expert. “On the whole it will be weighted more for consumer interests than for producers.”

While that might please consumer groups, it is sure to provoke opposition from some EU capitals.

“Community interest is an extremely hot potato with member states. Just say the word and they go into battle,” said one official, who predicted that reactions to the Commission's new reflection would divide “right down the middle” in line with the traditional north-south split between free-traders and protectionists.

Liberalisers hope that giving more consideration to the concerns of individual and industrial consumers of foreign imports will lead to “more market-sensitive rulings” from the anti-dumping body.

They would also like to see more use of existing rules which allow lower duties or arrangements under which the foreign producer promises not to sell below an agreed minimum price.

The Union already applies those alternatives more readily when dealing with central and eastern European exporters, even though its anti-dumping policy is supposed to be an automatic, not a discriminatory, tool.

Trade experts argue that most of the anti-dumping duties levied on Chinese goods are economically indefensible. As the world's biggest exporter, China has become the main target of duties and is increasingly vocal in its condemnation of EU practices.