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EU to keep strong trade defences even with China shift: official

[WASHINGTON] The European Union must maintain solid trade defences even if it decides to grant China market economy status, EU Trade Minister Cecilia Malmstrom said on Wednesday.

Malmstrom told reporters in Washington that the discussion within the EU on China's trading status did not alter the need for China to deal with its excess steel production capacity now flooding global markets.

"Whatever happens to market economy status, China needs to behave responsibly and to make sure that its overproduction of steel isn't dumped into the global market," Malmstrom said.

The European Commission, the EU's executive branch, intends to decide by December whether to grant China market economy status, which would limit the EU's power to impose duties on excessively cheap Chinese imports.

Reuters reported exclusively on Friday that the European Union was considering making a change in China's market economy status conditional on China sharply reducing the amount of steel it exports to Europe.

Malmstrom declined to comment directly on the internal market economy discussions, but said that the EU was pursuing remedies with China on a "parallel track" to reduce overcapacity and unfair steel trading practices.

The EU was analyzing the consequences of granting full or partial market economy status or not making any changes, she said.

"We need to make a very thorough assessment of this and we need to deal with the steel crisis. On trade, we also need to maintain solid trade defense instruments towards China and others, now and after December," Malmstrom added.

As China's economy has slowed, the government has pledged to give more free rein to market forces, though some foreign businesses have expressed disappointment at the speed of those reforms.

China's official Xinhua news agency said in a commentary on Thursday the EU should quickly grant market status as Beijing has vowed to "continue to mitigate the government interference on pricing" in industries such as energy, transport and telecommunications.

Chinese Foreign Ministry spokesman Hong Lei said China had noted the "different voices" from the EU on the market economy status issue, but that China had fulfilled its obligations under the World Trade Organization (WTO). "We hope that the EU, as an important member of the WTO and important supporting force of international rule of law and in the multilateral trade system, can respect the WTO's rules," he told a daily news briefing in Beijing.


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