WTO rebuke spurs EU rethink on duties

The European Union has been rebuked by the World Trade Organisation for the way it imposes extra duties on imports it deems unfairly priced, with potential implications for a wide range of products ranging from shoes to glazed tiles.

In a notable victory for China, a WTO panel found in an interim report that the EU’s practice of imposing a single national blanket duty on imports covered by so-called “anti-dumping” measures breaks global trade rules.

The case is another example of a trend in international trade diplomacy: WTO members seeking to circumscribe their trading partners’ use of anti-dumping and other emergency blocks on imports by litigation at the WTO.

The case in question relates to the import of screws and bolts from China, which face an extra duty of 85 per cent when entering the EU because Brussels deems them to be “dumped” in Europe below market prices.

But the trade watchdog found that the extra duties should not be applied to all Chinese exporters indiscriminately, even though Europe treats China as a “non-market economy” for trade purposes.
The WTO panel’s stance does not strike down anti-dumping duties for bolts or any other category of products. But it seeks to ensure that such duties are imposed on a company-by-company basis rather than applied to all possible exporters.

“It would represent an overhaul of the methodology currently used, which lumps all the exporters together, with few exceptions,” said Edwin Vermulst, a trade lawyer based in Brussels. “It is a matter of principle for China.”

The report points to a likely Chinese victory in the first dispute it has brought against the European Union since joining the WTO eight years ago.

“The amount of money at stake here is not huge in this case, but it will have repercussions on other anti-dumping cases,” one person briefed on the report said.

The interim ruling, if confirmed as expected next month and pending appeal, would force the EU into reviewing anti-dumping duties on other non-market economies, including Vietnam and Albania.

The EU applies extra levies to Chinese bicycles, textiles and shoes, and is rumoured in trade legal circles to be considering imposing fresh duties on certain high-tech products.

Governments have become more willing to challenge anti-dumping laws at the WTO.