Expert urges EU to end surrogate country system as scheduled

"The WTO should abandon the surrogate country system used in anti-dumping investigations against Chinese exports as scheduled at the time of China’s entry into the organization 15 years ago," Jean-Fran?ois Bellis, a legal expert on anti-dumping cases from Belgium, said in a recent interview with the People's Daily.

He added that WTO members must fulfill their obligation and commitment to this international treaty.

In a market economy, the price of imported goods and the cost in the exporting country is compared to determine whether it involves dumping. But in non-market economies, the prices from another market economy, namely a surrogate country, will be taken as benchmark to calculate anti-dumping duties.

When China joined the WTO in 2001, it was considered a non-market economy. The Article 15 (a) (ii) of China's WTO Protocol of Accession states that importing countries have the right to choose prices in other markets as benchmark if Chinese producers fail to prove they are under market economy conditions in terms of production and sales.

But Article 15 (d) of the protocol stipulated at the same time that this rule must be terminated after 15 years of China's membership of the WTO, which means that the EU must end its "surrogate country system" by December 11, 2016.

"As it's written in the protocol, the member countries who list China as a non-market economy are not able to use surrogate country system in their anti-dumping investigations starting from December 11, 2016, or they will violate the WTO rules," said Bellis, also managing partner of law firm Van Bael & Bellis.

Not long ago, the European Commission officially presented a proposal to amend its legislation on anti-dumping and anti-subsidy measures. But in the proposed new model, the EU uses "market distortion" as a substitute for "non-market economy" though the proposal apparently suggested abolition of the name list.

It also claimed that EU will continue to take third-party prices as reference in anti-dumping investigations against the "economically distorted" WTO members.

“It does not mean an end of the surrogate country system, but a kind of extension to what the EU did previously,” Bellis rebuked the suggestion, adding that the EU’s incomplete implementation of legal obligations flagrantly violates the WTO rules and seriously undermines the spirit of international rule of law.

He called on the EU to fulfill the obligations stipulated in Article 15 of the protocol as scheduled without reservations based on international law and trade rules.

“The EU should terminate the surrogate country system in anti-dumping investigations against China from December 11, 2016”, he said, explaining that a timely implementation of this article is the obligation for the EU and other WTO members, rather than a favorable policy for China.

Any member must not distort, avoid or delay it by citing their domestic laws or standards as excuses, Bellis stressed.

"With rights come responsibilities," Bellis noted, saying that the EU could enjoy its rights only if it fulfills its WTO obligations. If the EU escapes from its responsibilities under the pretext of its domestic law, it will be finally punished, the lawyer added.

“China is sure to win if it files a lawsuit against the EU for not implementing Article 15. Apart from legal punishment, many European enterprises will suffer huge losses,” the expert warned.

He pointed out that China is the EU's second-largest trade partner with a daily trade volume of over 1 billion euros.

Given that the Chinese market is more and more important for European enterprises, the discriminatory practice of the EU will deteriorate the environment of bilateral trade and impede European enterprises' entry into the Chinese market, the lawyer underlined.