EC sees lower job losses from easing China trade defences: note

[BRUSSELS] The European Commission has estimated job losses from relaxing trade defences against China well below predictions by opponents of the move, according to an EC document, in a sign it is leaning towards accepting Beijing's demands.

Easing the defences without any mitigating measures would result in job losses in the range of between 63,600 and 211,000, according to a Commission document sent to member states before a trade ministers meeting on Feb. 2 and seen by Reuters.

The figure is in sharp contrast to the employment impact of between 1.7 and 3.5 million jobs in a study commissioned by Aegis Europe, a grouping of industries opposed to easing trade defences against China.

The European Union has to decide whether to recommend granting China "market economy status" by a Dec. 11 deadline, which Beijing says is its right 15 years after it joined the World Trade Organisation.

Market economy status would make it harder for Europe to impose anti-dumping duties on Chinese goods sold at knock-down prices, changing the criteria for determining a fair price.

A decision will be taken together with the EU's 28 members and the European Parliament.

The Commission itself will discuss the matter again in July after receiving feedback. "The Commission has decided to conduct an in-depth impact assessment to inform its decision-making process," the note said.

The note from senior officials in the trade defence section of the Commission said the study for Aegis assumed decreased duties for all imports from China. However, products subject to anti-dumping duties are only applied on 1.38 percent of imports from China. The other study's findings should be viewed "with great caution", it said.

The EU is China's biggest trade partner, and China is second only to the United States for the EU. China's trade surplus with the bloc in goods was 137 billion euros (US$149.5 billion) in 2014.

The steel industry in particular has been a fierce opponent of any loosening of trade barriers against China, the EU sector lodging a series of complaints over dumping - selling at below domestic market prices or below the cost of production.

Free trade advocates say Europeans gain from cheaper Chinese imports and that companies such as Alstom or Siemens will gain easier access to China's vast market in return. Rebuffing Beijing also risks retaliation.

REUTERS