 Chinese companies’, which
is problematic, given
that the EU considers China to be a non-market-economy.
In response to the strong opposition – and pressure from the European Parliament – the European Commission has decided not to impose provisional duties. A trade compromise has been reached that will allow China to continue to access the European market for solar supplies at an agreed minimum price – at least until December, when the final decision will be made by the EC. This decision could remain in place for up to five years. The risk of retaliatory measures by China may have been averted temporarily, but it is clear that damage has already been done to EU industry, to the EU’s energy policy, to relations with a major trader and to the global economy, which is now deeply connected through trade and investment ties.
There remain other concerns: the compromise reached in the settlement in effect amounts to a form of voluntary export restraint: ‘price undertaking’ means that Chinese companies agree to a minimum price for their product to avoid an anti-dumping duty. This represents a step backwards and a return to the type of protection used in the 1970s, which has all of the negative effects of the initially proposed anti-dumping measures (such as loss of efficiency, high prices, anti-green credentials, and antagonising China), but not the extra tax revenue that would have resulted.
The EC seems increasingly to be choosing a more protectionist stance over trade policy, which will hamper the global economy and the economies of developing countries. Although transparency has been termed the ‘best insurance policy against protectionism’ by the WTO Director Pascal Lamy, the approach of the EC Directorate General on trade has not seemed to heed this advice.
As the EU-China case shows, within an already tense global arena, the credibility of the rules and the practice of anti-dumping measures need to be reassessed at the trade negotiation table. The risk, if not, is that the rule-making, enforcement and supervisory role of the WTO – which is vital for influencing 21st-century trading patterns in development-friendly ways – could be undermined.