This is from the European Commission:
The EU is changing its anti-dumping and anti-subsidy legislation to address state induced market distortions
Brussels, 4 October 2017
The European Parliament and the Council have agreed to change the EU's anti-dumping and anti-subsidy legislation following a proposal from the European Commission from November 2016.
The main change to the anti-dumping legislation is the introduction of a new way to calculate dumping in anti-dumping investigations on imports from members of the World Trade Organization (WTO) in case prices and costs are distorted because of state intervention. The changes do not target any particular country. ...
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What will be the new methodology for calculating dumping margins, and what countries will be affected?
For WTO members, the dumping margin is normally calculated under the standard rules mentioned above. However, domestic prices and costs can be distorted owing to state interference. In this case, they do not provide a proper basis to determine the comparison with the export price. Under the new methodology when it is not appropriate to use domestic prices or costs due to these distortions, other benchmarks reflecting undistorted costs of production and sale will be used. These could include benchmarks, or corresponding costs of production and sale including in an appropriate representative country with a similar level of economic development as the exporting country. This new methodology will allow the Commission to establish the actual magnitude of dumping where distortions exist.
There is no list of countries to which the new methodology applies – it will be used in dumping cases if significant distortions are found in the exporting country concerned which impact on prices and costs.
What type of state interference affects the reliability of prices and costs in an exporting country?
State interference can occur, for instance, when a market contains a large number of firms operating under the ownership, control or guidance of the authorities of the exporting country. It could also occur where there is a state presence in firms allowing for interference in prices or costs or pursuing policy objectives. Other examples are public policies discriminating in favour of domestic suppliers, or exporters' access to financing pursuing public policy objectives.
Under the new methodology can costs in the exporting country be used to calculate dumping?
Domestic costs in the exporting country are used where they are undistorted by state interference. The legislation ensures that there is no ambiguity: distorted costs will not be used in the new methodology. This was a primary concern in the drafting of the legislation.
How would the Commission decide if the economy of a country is distorted?
The Commission intends to prepare and issue reports describing the specific circumstances of the market in any given country or sector. These reports and the evidence on which they are based would become part of any anti-dumping investigation into that country or sector, and would be publicly available. EU industry could also use information from these reports when lodging a complaint or a request for review.
Will poor social and environmental standards be taken into account in the new methodology?
For the first time, social and environmental standards will play a role in the context of trade defence. Notably, where the Commission has a choice between a number of appropriate representative countries with a similar level of economic development as the exporting country under investigation, the level of social and environmental protection in the representative source country will be taken into account in the selection.
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Do the changes grant 'market economy status' to any country?
These changes will not lead to any country being granted 'market economy status'. The proposal is about introducing a dumping methodology which can take into account the changes in the global trading environment, as well as changes in the legal framework of the WTO.
This new policy seems to shift away from formally giving countries "market economy status," and instead focuses on whether prices and costs are "distorted because of state intervention." Is that really any different? Is this just repackaging the same policies under a new name?
One aspect that is particularly interesting is the reference to "poor social and environmental standards." The Commission says that where it "has a choice between a number of appropriate representative countries with a similar level of economic development as the exporting country under investigation, the level of social and environmental protection in the representative source country will be taken into account in the selection." One question I have is whether this will have any impact on social and environmental standards. At first glance, it's not clear to me how it would, and if that's the case I'm not sure I see the point of including this (except to be able to make reference to social and environmental standards in the press release). Another question I have is what impact this will have on dumping calculations. For that, we will probably have to wait and see how it is applied. A third question is, "taken into account" how exactly? Should the representative country have the same level of these standards as the exporting country? A higher level? A final question is whether this is permitted under the AD Agreement. What exactly is the basis for taking these factors into account in this context? It sounds kind of arbitrary.
