China Faces Longer Wait for Any EU Plan to Cut Import Duties c

[BRUSSELS] The European Union put the brakes on a possible proposal to lower import duties on Chinese goods, signaling that political resistance to the idea is growing amid opposition by EU industries ranging from steel to solar.

The European Commission said it needed to assess more thoroughly the impact on EU manufacturers of any plan to recognize China as a market economy. Such a step would make it more difficult for European companies such as ArcelorMittal and Solarworld AG to win sufficiently high EU duties meant to counter alleged below-cost - or "dumped" - imports from China.

The commission, the 28-nation EU's executive arm, indicated it would wait until the second half of the year to present any proposal on the issue to the bloc's member states and the European Parliament. China, whose economic growth has slumped to the weakest since 1990, is pressing for market-economy designation from the EU by year-end on the basis of an agreement reached when the country joined the World Trade Organization in 2001.

"If there are measures to be taken related to this issue, then of course these individual measures will have to be assessed for impact," Frans Timmermans, the commission's principal vice president, told reporters on Wednesday in Brussels after he and his fellow commissioners held an initial debate on the matter. "Those are the rules." Trade Investigations Eleven months before the deadline for an EU decision, the commission is seeking more time to act on a matter for which it has had 15 years to prepare. That signals the political sensitivity in a Europe saddled with slow growth and high unemployment of making imports from China cheaper.

Market-economy status for China would ensure the EU uses Chinese data for trade investigations affecting the country. The bloc currently uses other nations' figures to calculate anti- dumping levies against China on the grounds that Chinese state intervention artificially lowers domestic prices and makes them an unreliable indicator of a good's "normal value." This practice results in higher EU duty rates against Chinese exporters and - by extension - more protection for European manufacturers.

Under the agreement that led China to join the the Geneva- based WTO in 2001, WTO members pledged to scrap in December 2016 a shortcut for applying a non-market economy standard in calculating anti-dumping duties on China. At the same time, this development won't grant China blanket status as a market economy.

While EU Trade Commissioner Cecilia Malmstroem has signaled openness to recognizing China as a market economy, Timmermans indicated that it's premature to speculate about any steps.

"I can't say as yet which measures that could be," he said. "But we will certainly keep looking into those possibilities."

BLOOMBERG