Chinese steel probe will be key test of new anti-dumping rules

Date: 20/05/1999

By Peter Chapman

China's steel industry is set to fight the biggest test case yet of new EU anti-dumping rules which recognise the country's gradual transition to a market economy.

The sector is preparing for battle after this week's announcement by the European Commission that it plans to investigate complaints that heavy gauge 'quarto' steel plate is being dumped onto the European market by China, Romania and India.

Brussels-based lawyers representing Chinese exporters say they will invoke the right granted to Beijing and Moscow last year to challenge dumping accusations by submitting price data from their domestic markets rather than from a comparable 'reference' country which exports the same product, as was always the case before the new rules were introduced.

They hope that the figures will prove that the low prices they charge reflect true market conditions rather than the distorting subsidies and administered prices typical of a command economy.

One legal expert said this approach would be much fairer on the Chinese and could lead to lower dumping duties being imposed, assuming the EU decided some action was necessary. "What is most important for China is that this is the first large dumping case since the market economy status rules were established. There is a possibility that they can meet the 'market' criteria," he said. "It is a much fairer treatment. If export prices are compared to a reference country, then the process is much more difficult."

He added that the case would be politically sensitive for the Commission, coming at a time when China is trying to demonstrate that it is opening up its economy to market forces as part of its efforts to secure World Trade Organisation membership.

The Commission's role is pivotal because it is the institution which delivers the final verdict in steel cases, rather than member states, under the terms of the European Coal and Steel Community treaty.

Moreover, the Commission's move to introduce the market-status criteria last year was heavily criticised by European industry and some argue the Union should take a particularly tough line in dumping cases where this status is sought.

However, Commission anti-dumping officials played down the political significance of the case, which is not expected to be settled until next year. "Some like to see political symbols. But we cannot play that game. There is no instruction that we have to take a soft or a tough line with the Chinese," said one. "We are technocrats; we take everything on a case-by-case basis."

Gordon Moffat of the steel lobby group Eurofer, which brought the complaint, said the case was just one of a slate of new complaints about the activities of steel firms in China, eastern Europe and Asia.