COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Possible change in the calculation methodology of dumping regarding the People's Republic of China (and other non-market economies) Accompanying the document Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulation (EU) 2016/1036 on protection against dumped imports from countries not members of the European Union and Regulation (EU) 2016/1037 on protection against subsidised imports from countries not members of the European Union
Date: 2016-11-09
Institutions: Directorate-General for Trade and Economic Security, European Commission
Subjects: World Trade Organisation, anti-dumping legislation, anti-subsidy proceeding, countervailing charge, dumping, import (EU), originating product, third country

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 9.11.2016  SWD(2016) 370 final   COMMISSION STAFF WORKING DOCUMENT  IMPACT ASSESSMENT  Possible change in the calculation methodology of dumping regarding  the People's Republic of China  (and other non-market economies) Accompanying the document Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulation (EU) 2016/1036 on protection against dumped imports from countries not members of the European Union and Regulation (EU) 2016/1037 on protection against subsidised imports from countries not members of the European Union {COM(2016) 721 final} {SWD(2016) 371 final} {SWD(2016) 372 final}  
 
 
 
 
 
 
 
 
 
Table of Contents 

INTRODUCTION .......................................................................................................................... 4 

1.  THE FUNCTIONING OF THE CURRENT EU TDI SYSTEM .......................................... 5 

2.  PROBLEM DEFINITION: WHAT IS THE PROBLEM AND WHY IS IT A 
PROBLEM? .................................................................................................................................... 7 

2.1.  Risks to the continued effectiveness of the EU’s TDI in relation to China ....................... 8 
2.2. 
Importance of maintaining a mutually beneficial relationship with China ………11 
2.3.  The problem drivers ......................................................................................................... 11 
2.4.  Problem tree ..................................................................................................................... 15 
2.5. 
Identification of the stakeholders: Who is affected by the problem? .............................. 17 
2.6.  What is the EU dimension of the problem? ..................................................................... 19 

3.  WHY SHOULD THE EU ACT? ............................................................................................ 20 

4.  OBJECTIVES: WHAT SHOULD BE ACHIEVED? .......................................................... 20 

4.1.  General objectives ........................................................................................................... 21 
4.2.  Specific objectives ........................................................................................................... 21 
4.3.  Consistency with other EU policies ................................................................................. 21 

5.  POLICY OPTIONS: WHAT ARE THE VARIOUS OPTIONS TO ACHIEVE THE 
OBJECTIVES ............................................................................................................................... 22 

Identifying the policy options .......................................................................................... 23 
5.1. 
5.2.  Description of the Policy Options ................................................................................... 23 

6.  IMPACT ANALYSIS .............................................................................................................. 26 

6.1. 
6.2. 
6.3. 

Impacts of Policy Option 1 – “Baseline” ......................................................................... 30 
Impacts of Policy Option 2 .............................................................................................. 33 
Impacts of Policy Option 3 .............................................................................................. 40 

7.  COMPARISON OF POLICY OPTIONS ............................................................................. 43 

7.1.  How do policy options compare? .................................................................................... 43 
7.2.  Preferred Option .............................................................................................................. 44 

8.  MONITORING AND EVALUATION: How would actual impacts be monitored and 
evaluated? ..................................................................................................................................... 45 

8.1.  Monitoring ....................................................................................................................... 46 
8.2.  Evaluation ........................................................................................................................ 47 

Annex 1 : Procedural information ................................................................................................. 48 

Annex 2   : Stakeholder consultation ............................................................................................. 51 

Annex 2.1: Report – Stakeholder conference ................................................................................. 62 

2 

 
 
 
 
 
 
 
 
 
 
 
 
 
Annex 2.2: Report – Social Partner meeting .................................................................................. 71 

Annex 3:  Who is affected by the change in anti-dumping methodology and how? ..................... 72 

Annex 4:   Analytical models used ................................................................................................ 73 

Annex 5:   Section 15 – China’s Protocol of Accession to the WTO ............................................ 76 

Annex 6:   Legal context of other WTO members ........................................................................ 79 

Annex 7:   TDI modernisation -LDR………………………………………...……………83 

Annex 8:   Independent Economic study - Confidential draft report…………………….86 

3 

 
 
 
 
 
 
INTRODUCTION 

Trade  is  an  essential  element  in  the  pursuit  of  economic  growth.  In  the  aftermath  of  the 
economic  crisis,  free  trade  is  a  key  factor  in  order  to  seize  the  opportunities  that  the  global 
economy has to offer. However, in order for all stakeholders to be able to benefit from these 
opportunities, trade has to be based on fair conditions, i.e. not dumped or subsidised.  

In  cases  where  fair  trading  conditions  have  been  compromised  by  trade  distortive  practices 
such as dumping or subsidisation, trade defence instruments (‘TDI’) may be used, in order to 
restore a level playing field.  

The  World  Trade  Organisation  (‘WTO’)  provides  the  legal  framework  for  the  TDI.  In 
particular, specific rules are laid down in the WTO Anti-dumping Agreement and the WTO 
Agreement on Subsidies and Countervailing Measures1. Under  WTO rules, anti-dumping or 
anti-subsidy measures, generally in the form of additional tariffs, can be imposed on products 
these  products  are 
from 
dumped/subsidised  and  causing  injury  to  the  domestic  industry.  Regarding  non-market 
economy  (‘NME’)  countries  such  as  the  People’s  Republic  of  China  (‘China’)2,  a  specific 
methodology may be applied to calculate the dumping margin. Specific provisions have been 
included to that effect in the Accession Protocols to the WTO of certain such NME countries.  

investigation  demonstrates 

third  countries, 

if  an 

that 

The WTO members must ensure that their national laws and practice are consistent with the 
WTO  agreements, which are not  directly applicable. In  this respect,  WTO rules  leave some 
room  for  additional  rules  to  be  developed.  Therefore,  provisions  in  the  national  legislations 
regarding  TDI,  including  the  provisions  on  how  to  treat  China  and  other  NME  countries, 
differ among WTO members. In the EU, the rules for the functioning of TDI are contained in 
the Basic Anti-dumping Regulation3 and the Basic Anti-subsidy Regulation4.  

When  China  joined  the  WTO  in  December  2001,  an  arrangement  concerning  'price 
comparability  in  determining  subsidies  and  dumping'  was  introduced  in  Section  15  of  the 
Protocol of Accession of China to the WTO. Some of the provisions included in Section 15 
will expire in December 2016. 

According  to  the  current  EU  TDI  legislation,  it  is  mandatory  to  use  a  specific  methodology 
when  calculating  dumping  regarding  China  and  other  NME  countries.  Therefore,  there  is  a 
need to analyse any possible impact of the expiry of certain provisions of Section 15 on the 
EU trade defence instruments and in particular on the methodology to be used with regard to 
the  calculation  of  dumping  in  cases  involving  China.  Furthermore,  there  is  a  need  to  assess 
any  impact  of  a  possible  change  in  methodology  on  the  EU  economy,  and  in  particular  on 
jobs, as a result of this expiry and/or any change in methodology.  

1 The EU safeguard instrument is not subject to this Impact Assessment.   
2 Centralised command economies such as Cuba are not relevant to the present discussion. 
3 Council Regulation No. 1225/2009 of 30.11.2009. 
4 Council Regulation No. 597/2009 of 11.6.2009. 

4 

 
 
 
 
 
 
 
 
 
 
 
 
                                                 
The  expiry  of  certain  provisions  of  Section  15  of  China’s  Accession  Protocol  in  December 
2016,  is  the  trigger  for  possible  changes  in  the  current  specific  anti-dumping  methodology. 
However,  other  countries  that  are  WTO  members,  and  where  distortions  prevail  in  the 
economy, could also be covered by a possible change in methodology5.  

1.  THE FUNCTIONING OF THE CURRENT EU TDI SYSTEM 

In  the  EU’s  TDI  system,  the  initiation  of  investigations  is  normally  based  on  complaints 
prepared by EU industry, which must contain sufficient prima facie evidence of the existence 
of  dumping  or  subsidisation  in  the  exporting  country,  and  of  injury  suffered  by  the  EU 
industry as a result. If the relevant criteria for initiation are met, an investigation is initiated.  

Dumping takes place when a product is exported at a price lower than its “normal value”. The 
normal  value  is  the  price  of  a  product  when  sold  on  the  domestic  market  of  the  exporting 
country.  If the domestic price cannot or should not be used (e.g. if it is not in the ordinary 
course  of  trade),  normal  value  is  “constructed”  on  the  basis  of  cost  of  production,  or  it  is 
based on the export price to third countries.  

Domestic prices and costs are normally driven by market forces and hence reflect the actual 
market  situation  in  a  certain  country/sector.  This  is  why  the  existence  and  magnitude  of 
dumping  for  those  countries  is  normally  based  on  a  comparison  of  the  export  prices  with 
actual  domestic  prices  and  costs  in  the  exporting  country  This  is  called  the  ‘the  standard 
methodology’ as set out in the WTO Anti-dumping Agreement.  

The  EU  Basic  AD  Regulation  lists  NME  countries  and  economies  in  transition,  such  as 
China5,  that  do  not  or  do  not  yet  completely  operate  under  normal  market  economy 
circumstances.  In  such  cases,  domestic  prices  and  costs  do  not  necessarily  reflect  market 
forces  because  of  State  interference  in  the  economy.  Such  prices  and  costs  are  therefore 
normally considered as unreliable.  

The current EU legislation mandates the investigating authority to disregard domestic prices 
and costs in these countries and to use  the “analogue country methodology”.  This  means 
that  in AD investigation concerning imports of a product originating in China or other NME 
countries,  the prices and costs of these countries are disregarded, and prices and costs data 
from  another  country,  that  is  a  market  economy  (a  so  called  ‘analogue  country’)  is  used  to 
establish normal value. This normal value is compared with the export prices of the Chinese 
products  under  investigation  for  the  determination  of  the  dumping  margin.  Since  data  from 
another  market  economy  country  are  used,  the  problem  of  non-market  distortions  in  the 
exporting country is not an issue under the analogue country methodology. 

5 The following countries are subject to a specific methodology under the current Basic AD Regulation: Vietnam 
and  Tajikistan  (who  also  have  specific  provisions  in  their  Accession  Protocols  to  the  WTO)  and  Albania, 
Armenia,  Azerbaijan,  Georgia,  Kyrgyzstan,  Moldova,  Mongolia  and  Kazakhstan  (WTO  members)  and 
Belarus, North Korea, Turkmenistan and Uzbekistan (non-WTO members).  

5 

 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
The analogue country methodology is also used by other WTO members, such as Japan, but 
there are also other specific methodologies e.g. based on production factors, as used by the US 
(please  see  section  2.3.2.  and  annex  6  for  more  details  regarding  methodologies  and 
legislation of other WTO members). 

Individual Chinese exporting producers (as well as those of other NME countries listed in the 
Basic  AD  Regulation  that  are  WTO  members)  have  the  possibility  to demonstrate  that  they 
operate under market economy conditions. If they provide conclusive evidence to this end, the 
normal  value  for  such  exporting  producers  may  be  based  on  their  own  costs  and  prices  (so 
called “market economy treatment” or MET)6. 

The  EU  Basic  AD  Regulation  also  provides  for  the  use  of  other  methodologies  to  establish 
normal  value  in  cases  where  a  so-called  “particular  market  situation”  exists.  In  such  cases, 
prices and costs are adjusted in order to allow for a fair comparison.  

For  NME  countries,  as  explained  above,  the  analogue  country  methodology  is  mandatory 
according to the current EU legislation. Hence, a change in the use of the analogue country 
methodology vis-à-vis NME countries would necessitate a legislative change in the form of an 
amendment to the Basic AD Regulation. 

TDI modernisation  

In  2011,  the  Commission  launched  the  modernisation  of  the  EU’s  TDI,  in  order  to  further 
improve  certain  areas  that  have  been  identified  by  stakeholders  and  by  the  Commission 
services in the use and practice of the instruments. An external evaluation completed in 20127  
also  identified  certain  issues  in  this  regard.  That  exercise  led  to  a  communication8  and  a 
legislative proposal9 adopted by the Commission in April 2013.  

The  main  goal  of  the  TDI  modernisation  proposal  is  to  enhance  transparency,  effectiveness 
and  efficiency  of  the  system  for  the  benefit  of  all  stakeholders.  Specific  elements  of  the 
modernisation  include providing information prior to the imposition of provisional measures, 
reducing  the  duration  of  investigations,  easier  access  to  TDI  for  SME’s,  or  the  partial  non-
application of the lesser duty rule in cases of raw material distortions (LDR). The latter LDR 
element  has  prevented  the  Council  from  reaching  a  position  on  the  TDI  modernisation 
proposal. 

What is the LDR? On the basis of the findings in an investigation and in accordance with the 
WTO  agreements  and  the  EU  legislation  and  practice,  the  amount  of  dumping  or 
subsidisation,  and  the  level  of  injury  are  calculated  to  determine  the  level  of  anti-dumping 
(‘AD’)/anti-subsidy  (‘AS’)  measures,  if  any.  An  AD/AS  duty  can  never  be  higher  than  the 

6 In the five year period from 2006 to 2010, 173 applications for MET were received and 37 were granted, in the 

five year period from 2011 to 2015, 75 applications were received and 4 were granted. 

7 http://trade.ec.europa.eu/doclib/press/index.cfm?id=786 
8 COM(2013) 191 final of 10.04.2013.  
9 COM(2013) 192 final of 10.04.2013. 

6 

 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
dumping/subsidy  margin  but  it  must  be  lower  (at  the  level of  the  injury  margin),  if  a  lower 
duty is sufficient to eliminate the injury suffered by the EU industry.  This principle is called 
the  “lesser  duty  rule”  and  while  it  is  not  mandatory  under  WTO  rules,  its  application  is 
mandatory under EU legislation.   

Therefore,  the  TDI  modernisation  proposal  and  a  possible  amendment  to  the  dumping 
calculation methodology are different concepts. The proposed changes to the LDR under the 
TDI modernisation proposal do not address or affect the calculation of the dumping margin.  

The  Commission  has  set  out  further  elements  for  TDI  modernisation  in  the  Steel 
Communication.10 The Commission, the EP and the European Council have called for a swift 
completion  of  the  work  on  TDI  modernization.  (Please  find  more  details  regarding  TDI 
modernisation and the lesser duty rule in annex 7). 

2.  PROBLEM  DEFINITION:  WHAT  IS  THE  PROBLEM  AND  WHY  IS  IT  A 

PROBLEM? 

Following the expiry of certain provisions of China’s Protocol of Accession to the WTO11 a 
change  in  methodology  may  be  required.  Without  recourse  to  the  analogue  country 
methodology, the EU’s TDI may not be as effective in relation to imports from that country 
(and  other  NME  countries  with  distortions  in  their  economies).  In  addition,  the  wider 
economic relationship with China needs to be considered (see sections 2.1 and 2.2 below).  

Moreover,  the  opacity  of  NME  countries  not  only  has  an  influence  on  costs  and  prices  but 
creates  capacities  and/or  overcapacities  that  would  not  exist  in  a  market  economy.  Such 
capacities  may  have  a  negative  impact  on  competitors  in  market  economies  and  other 
markets. Effective TDI must be able to address such situations.  

This  impact  assessment  focuses  on China  because  certain  provisions  of China’s  Protocol  of 
Accession  to  the  WTO  expire  in  December  2016.  Furthermore,  China  is  by  far  the  country 
most subject to EU TD investigations and measures, and thus also most relevant regarding the 
economic  impact  that  any  change  in  methodology  would  have.  Currently,  the  EU  has  more 
than 50 trade defence measures in force regarding Chinese imports and one regarding imports 
from Vietnam. However, other NME countries are also covered by a possible change in the 
anti-dumping methodology.  

In the public consultation a vast majority of stakeholders stated that they are familiar with the 
provisions  of  Section  15  of  China’s  Protocol  of  Accession  to  the  WTO  and  that  they  are 
aware  that  certain  provisions  of  that  section  will  expire  in  December  2016.  Almost  all 
respondents  are  aware  that  this  expiry  may  result  in  a  change  in  methodology  when 
calculating dumping in cases regarding China. Please see also section 6 and annex 2 for more 
details regarding the public consultation. 

10 ec.europa.eu/DocsRoom/documents/15947/attachments/1/translations/en/.../native 
11 Section 15 of China’s Protocol of Accession is attached in annex 5.  

7 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
2.1.  Risks to the continued effectiveness of the EU’s TDI in relation to China 

The  current  EU’s  TDI,  as  described  above  (see  section  1)  normally  effectively  offset  any 
injury caused by dumped/subsided imports from China12. There is a need to ensure that any 
methodology chosen in response to the expiry of certain provisions of Section 15 of China’s 
Protocol of Accession to the WTO,  is able to ensure the continued effectiveness of the EUs 
TDI.   

2.1.1. 

Insufficient remedy  for EU producers exposed to unfair competition from 
China and other NME countries 

(a)    Risks of using the standard methodology 

Chinese  authorities  still  exercise  a  significant  influence  on  the  economy,  e.g.  through  five-
year  plans  and  the  leading  role  of  state-owned  enterprises  that  do  not  always  operate 
according  to  market  forces.  Indeed,  in  China,  the  determination  of  sales  prices  or  costs  of 
production  (such  as  e.g.  credit  costs,  raw  materials  or  energy  used  in  the  production  of  a 
product) often does not follow normal market forces (see section 2.3.3 below). Because of this 
factor, a Chinese “normal value” established on the basis of such distorted prices or costs is 
not comparable to a normal value in a market economy without such influence, especially for 
the purposes of measuring the impact on competitors operating in international trade or in a 
market economy. 

Thus, dumping margins calculated according to the standard methodology would on a regular 
basis significantly understate the actual level of dumping (unless it would be determined that 
there is a "particular market" situation, justifying rejection of such data in favour of data from 
a third country). Hence, the dumping margin calculated on that basis would not reflect the full 
magnitude of actual dumping. This, in turn, would frustrate the very purpose and object of the 
Basic AD Regulation, which is to allow a duty to be imposed that is sufficiently high, to off-
set the injurious dumping. 

Furthermore,  dumping  margins  of  Chinese  exporters  based  on  the  standard  methodology 
would  in  many  cases  be  below  the  injury  margin,  which  reflects  the  actual  level  of  injury 
suffered by the EU industry as a result of the actual level of dumping (and what the European 
industry needs in order to redress the situation resulting from unfair trade).  However, WTO 
rules provide that the level of duty may never be higher than the dumping margin calculated.  

Therefore, in  many  AD  cases  involving  China,  the  level  of  the  duty  would  be  based  on the 
lower  dumping  margin,  which  would  be  insufficient  to  offset  the  injury  caused  to  the  EU 

12 “Evaluation of the European Union’s Trade Defence Instruments” (Contract No. SI2.581682), Evaluation 

Study 27 
   February 2012. 

8 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
industry  by  the  actual  level  of  dumping.  This  would  have  important  consequences  for  the 
effectiveness  of  the  AD  instrument,  which  may  no  longer be  able  to  restore a  level  playing 
field in trade between China and the EU. 

Many stakeholders consider the low duty levels, if based on the standard methodology, as a 
fundamental  problem.  In  the  public  consultation  a  vast  majority  of  respondents  considered 
that using the standard methodology would result in fewer AD investigations and would have 
an impact on the effectiveness of the TDI.    

The problem is amplified by the uncertainty relating to the position that other WTO Members, 
such  as  the US  or  Japan,  may  take  in  respect  of  the expiry of  certain  provisions  of  China’s 
WTO Accession Protocol. If they decide not to change their methodology, when calculating 
the dumping margin in cases involving China (as from December 2016), duty levels imposed 
would  in  many  cases  be  higher  than  those  of  the  EU,  if  the  EU  were  to  apply  the  standard 
methodology. As a consequence, excess volumes may be more easily diverted to the EU, as 
long as the EU has lower duty levels in place, than other WTO Members such as the US or 
Japan.  

Furthermore,  EU  industries  are  confronted  with  unfair  competition  from  China  because  its 
industry is not subject to the same risks and constraints as investors in market economies.  

In  NME  and  economies  in  transition,  investment  decisions  are  often  not  driven  by  market 
forces, but based on broader planning by the various levels of the State. Specifically, China 
operates  a  complex  system  of  plans  at  all  levels  of  the  government,  often  broken  down  to 
individual sectors. Thus, industries are created and sectors developed that may not exist, if it 
were not for the strategic investments and planning by the State. In short, such industries are 
not  exposed  (or  significantly  less  so)  to  the  risks  associated  with  start-up  phases  or  the 
subsequent  execution  of  the  investment  projects.  Therefore,  they  can  offer  goods  at  lower 
prices than private market investors and hence sell higher volumes, as they are not subject to 
the  same  constraints  and  risks.  This  sustained  support  from  the  State  also  allows  domestic 
companies to engage in long term dumping and for enormous overcapacities to be built up.  

Under such circumstances, the standard methodology set out in the EU Basic AD Regulation 
does  not  necessarily  take  into  account  any  benefits  to  the  Chinese  producers  from  such 
strategic investments, which may cause additional trade distortions.  

In the public consultation a large majority of respondents considered that they compete with 
products  subject  to  trade  distortive  measures  in  China.  This  shows  the  importance  of 
providing  an  effective  remedy  against  such  practices.  Some  stakeholders  also  claimed  that 
because the EU is one of the most open economies in the world, the effectiveness of TDI is 
even more important than in other countries, which have other means of defence, such as high 
import tariffs, very high AD/AS duty levels, or other obstacles to trade. 

(b)    Anti-subsidy duties do not reflect the full amount of subsidisation 

9 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
During  anti-subsidy  investigations  a  calculation  is  made,  based  on  the  applicable  specific 
legal provisions, of the exact magnitude of subsidisation, by the exporting country and injury 
to EU industry. 

One  critical  problem  in  relation  to  China  is  the  opacity  of  the  subsidisation  schemes.  Such 
schemes  are  not  always  defined  through  published  legislation.  In  addition,  China  has  so  far 
failed to comply with its obligation to notify its subsidy schemes to the WTO. Therefore, the 
AS instrument is more difficult to use for complainants than the AD instrument, resulting in 
fewer AS complaints and investigations, and often also in lower duties. For instance, in order 
to impose an AS duty, it must be demonstrated that the subsidy is specific to an enterprise or 
industry or group of enterprises or industries.  

Furthermore, under current rules, essentially only the subsidy schemes  identified by the EU 
industry  in  the  complaint  can  be  investigated  during  the  subsequent  investigation  by  the 
Commission services. Any subsidy schemes that are discovered by the investigating team in 
the course of the investigation, which were either unknown to the EU industry at the time of 
lodging the complaint, or, which are entirely new schemes, are difficult to countervail because 
their legal status may not be clear in the EU’s law. 

Thus, any benefit derived by Chinese exporters from a subsidy scheme that was not identified 
in the complaint might not be reflected in the amount of the countervailing duty imposed by 
the EU.  

2.1.2.  Risks for the stability and continued effectiveness of existing measures  

TD measures are normally imposed for a duration of five years.  Before the end of the five 
year  period,  industry  may  request  an  expiry  review  during  which  the  continued  need  for 
measures is examined. If the investigation shows that dumping/subsidisation and injury will 
likely continue or recur in the absence of measures, the existing measures will be prolonged 
for another five year period. 

WTO rules and EU legislation also allow for the possibility to request an interim review, if 
circumstances have changed since the original investigation and the imposition of the original 
definitive  duty.  If  the  relevant  criteria  are  met,  an  interim  review  is  initiated  to  determine 
whether there is a need to modify the original duty level. Such a request for an interim review 
can  in  principle  be  lodged  during  the  five-year  period,  or  together  with  a  possible  expiry 
review. 

A  possible  change  in  methodology  for  the  calculation  of  the  dumping  margin  in  cases 
involving China could be considered to constitute a change in circumstances, which merits the 
initiation  of  an  interim  review.  Although  the  expiry  of  certain  provisions  of  Section  15 
constitutes  a  change  in  the  legal  situation,  in  the  Commission's  view  it  does  not,  in  itself, 
amount to a change in the factual circumstances and thus should not trigger an interim review. 

Furthermore, given the significant number of measures in force, a requirement to review all of 
them  simultaneously  would  be  incompatible  with  the  principle  of  good  administration.  It 

10 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
would  create  uncertainty  regarding  the  continuity  of  the  measures  in  force  and  risk  the 
administration’s ability to comply with the mandatory deadlines.   

2.2. Importance of maintaining a mutually beneficial relationship with China and respond 
adequately to the expiry of certain provisions of Section 15 of China’s  WTO Accession 
Protocol 

China  expects  that  following  the  expiry  of  certain  provisions  of  Section  15  of  its  WTO 
Accession  Protocol,  the  EU  will  cease  to  label  China  a  NME  and  will  no  longer  apply  the 
analogue  country  methodology  in  TD  investigations  concerning    products  originating  in  or 
consigned from China.  

China  has  already  hinted  that  if  the  use  of  the  analogue  country  methodology  were  to  be 
continued as currently provided in the EU legislation, this could have negative repercussions. 
It  could,  among  others,  lead  to  litigation  in  the  WTO  and  in  the  European  Court  of  Justice 
(‘ECJ’), as well as increased TDI activity by China, as has been observed in the past. 

2.3. The problem drivers  

2.3.1.  Expiration of certain provisions of Section 15 of China’s Accession Protocol to 
the WTO and a possible change in methodology for the calculation of dumping 

When China joined the WTO in December 2001, a transitional arrangement for its accession 
was introduced in Section 15 of the Protocol of Accession of China to the WTO. Section 15 
(a) (ii) included in the Protocol of Accession of China will expire in December 2016.  

If, following this expiry, the EU legislation (Article 2.7 of the Basic AD Regulation) would be 
changed,  this  will  have  an  impact  on  future  investigations  and  may  also  entail  changes  for 
measures  already  in  place,  at  the  time  of  entering  into  force  of  a  possible  change  in 
legislation. 

2.3.2.  Chinese expectations related to the expiry of certain provisions of Section 15 

of  
    China’s Accession Protocol to the WTO 

With  the  expiry  of  these  provisions,  China  expects  that  the  EU  will  cease  to  systematically 
apply  the  analogue  country  methodology  for  anti-dumping  purposes.  China  has  voiced  its 
expectations in this regard at several occasions and in various fora. Should this change not be 
applied, China could pursue this matter by way of WTO litigation. 

Although, China has certain concrete expectations, WTO members may react in various ways 
to  the  expiry  of  certain  provisions  of  Section  15  of  China’s  Protocol  of  Accession  to  the 
WTO. 

11 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
While  the  EU  is  coordinating  with  its  major  partners  (e.g.  US  and  Japan)  regarding  anti-
dumping methodologies in the light of the expiry of certain provisions of China’s Protocol of 
Accession to the WTO, their positions may evolve. It is important to note that the process to 
legally  implement  the  change  in  methodology  is  significantly  different  in  other  countries  as 
compared  to  the  EU.  For  the  EU  to  amend  its  trade  defence  legislation,  it  will  require  a 
Commission  proposal  through  ordinary  legislative  procedure  involving  the  European 
Parliament  and  the  Council.  This  is  not  the  case  in  other  countries  and  therefore  their 
procedures for changing law or practice are swifter.  

It should also be noted that, currently, the EU and US approaches with regard to non-market 
economies differ in several aspects. In particular, in the EU’s basic AD Regulation, the use of 
the  analogue  country  methodology  is  an  obligation  regarding  China  and  the  other countries 
specified in that Regulation (Article 2.7(a)).  Therefore, as compared to other users of the TDI 
vis-à-vis China, the EU is in a rather unique position, as the EU legislation mentions China 
specifically classifying it as a NME country.  

The current US legislation provides that the determination of NME status may be made “with 
respect  to  any  foreign  country  at  any  time”.  It  is  thus  not  directly  relating  to  China’s 
Accession Protocol, and it is therefore possible that the US’s current methodology (based on 
'factors of production' selected in an appropriate foreign surrogate country) might also be used 
after December 2016. There are indications that the US13 will not, for the time being, change 
the methodology for the calculation of the dumping margin in cases involving China.  

Japan  currently  uses  criteria  similar  to  the  EU  to  determine  market  economy  conditions.  It 
also  has  a  presumption  of  NME  treatment  for  China.  Japan  has  a  non-legally  binding 
provision in its legislation under which it would consider granting market economy status to 
China  from  December  2016.  However,  Japan  has  made  no  official  statement  saying  that  it 
will continue to follow this guideline, and does not seem to support the automatic granting of 
MES to China from 2016.  

Canada  had  introduced  specific  provisions  in  its  law  in  2002,  with  regard  to  China  and 
Vietnam  and  a  deadline,  but  these  provisions  were  subsequently  repealed.  Thus,  Canada’s 
trade remedy system can continue to take into account whether these countries are operating 
according to market economy conditions. Any change to Canada’s law in this regard does not 
require an approval by the Parliament.  

Many stakeholders emphasised that the EU should coordinate with its major trading partners 
in order to see how they will react to the expiry of certain provisions of Section 15 of China’s 
Accession  Protocol.  As  explained  above,  the  EU  is  indeed  coordinating  with  its  partners. 
However, due to the various calculation methodologies used and the different, and, in in many 
cases more flexible legislations in place, there is no “one fit for all” approach and any possible 

13  No official statements are available from Japan and Canada. The latter country has however changed its law 
in order to remove the automatic expiry date for treating China as a NME. Australia, New Zealand and South 
Korea have changed their methodology many years ago in the context of FTA negotiations. Brazil officially 
granted MES to China in 2004, but still uses the analogue country methodology. 

12 

 
 
 
 
 
 
 
 
 
 
 
                                                 
 
 
change  in  methodology  must  be  tailored  to  the  specific  needs/legislations  of  each  WTO 
member  concerned.    Please  see  also  section  2.1.1  and  a  more  detailed  description  of  the 
systems of other WTO members in annex 6. 

2.3.3.  Pervasive distortions in the Chinese economy  

Section  15 paragraph  (d)  of  China's  Accession  Protocol  allows  WTO  members  to  establish, 
under certain circumstances, that China may become a market economy before the end of the 
15-year period. Shortly after the accession of China to the WTO, a bilateral process with the 
EU  was  established  in  order  to  give  China  the  possibility  to  demonstrate  that  it is  a  market 
economy  under  EU  domestic  rules,  which  comprise  five  criteria14.  On  the  basis  of  a 
continuous  assessment,  to  date  China  has  not  met  these  five  criteria.  On  the  contrary,  as 
assessed  in  the  bilateral  process  with  China  until  2011,  and  also  drawing  from  information 
gathered in AD and AS investigations carried out in China, a variety of distortions continue to 
exist.  These  include  differential  tax  treatment,  state  interference  e.g.  in  the  financial  sector, 
state  policies/plans,  and  a  variety  of  programs  at  various  governmental  levels  that  provide 
benefits  to  sectors/companies.  While  certain  similar  schemes  may  also  exist  in  other  WTO 
member countries, the sheer number and cumulative effect of Chinese schemes is unequalled, 
in particular as concerns the following:  

Various programs of tax exemption and reduction exist, these include e.g.: tax credits for the  
purchase  of  domestic  equipment  if  a  project  is  consistent  with  the  industrial  policy  of  the 
government  of  China,  tax  reductions  if  a  company  is  recognised  as  a  “high  and  new 
technology  enterprise”,  VAT  exemptions  and  import  tariff  rebates  for  the  use  of  imported 
equipment. Furthermore, a complex VAT refund system is designed to discourage exports of 
certain products (e.g. hot or cold rolled steel).    

According  to  the  Land  Administration  Law  of  China,  all  land  belongs  to  the  people,  and 
cannot be bought or sold. The law sets out the conditions by which land use rights can be sold 
to  businesses by bidding, quotation or  auction. However, there is  no functioning  market for 
the  sale  of  land  use  rights  and  thus  often  the  amount  paid  for  land  use  rights  is  below  the 
market rate. 

14  The five  criteria are largely based on Article 2.7(c) of the Basic AD Regulation concerning individual market 

economy treatment determinations in specific investigations, and are the following: 

1. a low degree of government influence over the allocation of resources and decisions of enterprises, whether 
directly or indirectly (e.g. public bodies), for example through the use of state-fixed prices, or discrimination 
in the tax, trade or currency regimes; 

2. an absence of state-induced distortions in the operation of enterprises linked to privatisation and the use of 

non-market trading or compensation system; 

3. the  existence  and  implementation  of  a  transparent  and  non-discriminatory  company  law  which  ensures 
international  accounting  standards,  protection  of 

adequate  corporate  governance  (application  of 
shareholders, public availability of accurate company information); 

4. the  existence  and  implementation  of  a  coherent,  effective  and  transparent  set  of  laws  which  ensure  the 

respect of property rights and the operation of a functioning bankruptcy regime; 

5. the existence of a genuine financial sector which operates independently from the state and which in law and 

practice is subject to sufficient guarantee provisions and adequate supervision. 

13 

 
 
 
 
 
 
 
 
 
 
                                                 
 
Furthermore, there are also programs aiming at providing goods, such as electricity or water, 
for less than an adequate price.   

Regarding  the  Chinese  financial  sector,  fully  State-owned  banks  with  a  board  of  directors 
dominated by the government of China hold the highest market share and are the predominant 
players in the Chinese financial market.  State-owned banks are subject to legal rules which 
require them, inter alia, to carry out their loan business according to the needs of the national 
economy, provide credit support to encouraged projects or give priority to the development of 
high and new technology industries. Preferential loans and financial contributions in the form 
of debt for equity swaps, equity infusions, or disguised grants in the form of unpaid dividends 
are common practice. 

Besides  the  obvious  advantage  that  Chinese  producers  benefit  from  through  these  various 
schemes,  distortive  practices  also  led  to  intensive  capacity  building  and  enormous 
overcapacities  in  many  sectors  such  as  solar  panels,  chemicals,  aluminium,  glass, 
shipbuilding,  paper,  ceramics,  melamine,  cement  or  steel  as  well  as  high  value  added 
industries such as automotive or semi-conductors. 

The  overcapacity  is  also  caused  by  local  protectionism  and  the  fragmentation  of  industries 
that  is  driven  by  local  interests,  low  input  prices  due  to  government  policies  and  a  fiscal 
system  that  encourages  local  governments  to  attract  excessive  investment.  China  had  for 
many  years  massive  fiscal  stimulus  package  including  an  unprecedentedly  large  lending 
programme.  It  targeted  infrastructure  investment,  with  the  government-encouraged  lending 
surge  resulting  mainly  in  the  expansion  of  Chinese  State-owned  enterprises’  production 
capacity.  This  stimulus  package  poured  credit  into  increasingly  economically  non-viable 
projects  and increased  direct and indirect subsidies to investment and manufacturing.  While 
these  policies  boosted  the  economy  in  the  short  term,  in  the  medium  term  they  have  led  to 
macro-economic imbalances and distorted global markets.  

Furthermore, the Chinese economy rebalances from an investment and industry driven growth 
model  towards  services.  Therefore, also  industries,  such  as  non-ferrous metals,  that  have  so 
far supplied mainly the domestic market, have a very strong incentive to dump their excessive 
and heavily subsidized production abroad, as it can be seen currently in case of steel. 

2.3.4.  Current provisions do not adequately deal with distortions in the Chinese 

economy  

The standard methodology (Articles 2.3 and 2.5 in the EU’s Basic AD Regulation) foresees 
the  need  to  deal  with  distorted  prices/costs  but  only  as  punctual  distortions  in  an  otherwise 
normally  functioning  economy  of  market  factors.  Thus,  it  is  not  a  means  to  deal  with 
economy-wide  distortions,  except  insofar  as  they  are  demonstrated  to  impact  specific  costs. 
These  provisions could only  be used to  respond to  such  distortions  on a case-by-case basis, 
and  it  would  no  longer  be  possible  to  systematically  have  recourse  to  the  analogue  country 
methodology with respect to China. 

14 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
2.3.5.  Current rules provide only for AS schemes to be investigated in regard of 

which an investigation has been initiated 

Distortions in China regarding raw materials or energy, or distortions regarding domestic and 
export  prices  are  omnipresent.  Some  of  these  distortions  constitute  subsidies.  These 
distortions are proliferating and new subsidy schemes are created regularly.  

However,  under  current  rules,  normally,  only  AS  programs  and  schemes  that  have  been 
identified  
in  the  complaint  have  been  investigated  during  an  investigation.  New  schemes  that  are  not 
known to the EU industry at the time of lodging a complaint can only be taken into account in 
the  calculation  of  the  final  duty  level,  if  the  complainant  extends  the  complaint  and  a  new 
notice  of  initiation  is  published  (please  see  also  sections  2.1.1.and  2.3.3  for  more  details 
regarding subsidies). 

2.4. Problem tree 

Importance of maintaining a 
mutually beneficial relationship 
with China  

Risks to the continued 
effectiveness of the EU’s TDI in 
relation to China and other 
NME countries 

Risks for the stability and 
continued effectiveness of 
existing measures  

Insufficient remedy for EU 
producers exposed to unfair 
competition from China and 
other NME countries  

Chinese 
expectations related 
to the expiry of 
certain provisions of 
Section 15 

15 

Current provisions do 
not adequately deal 
with distortions  

Current rules provide 
only for AS schemes 
to be investigated in 
regard of which an 
investigation has 
been initiated  

P 
R
O
B 
L 
E
M
S 

D
R 
I 
V 
E 
R 
S 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expiration of Section 15 (a) (ii) 
Expiry of certain provisions of 
China’s Protocol of Accession 
to the WTO in December 2016 

Pervasive distortions in the 
Chinese Economy  

16 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.5. Identification of the stakeholders: Who is affected by the problem? 

2.5.1.  EU industry  

The EU industry is affected by trade defence action in three respects.  

First, the most important EU sectors benefitting today from TD investigations and measures 
involving China are the steel industry, the chemical industry, but also more specialised sectors 
such as the ceramics industry, the solar panel industry or the bicycle industry, to name only a 
few. These sectors compete today with dumped and subsidized imports from China and they 
seek relief from the negative consequences of such imports by filing AD and AS complaints.  

However, it is likely that further sectors, such as cement, aluminium, paper or glass, or high 
value added industries such as automotive or semi-conductors (as identified by stakeholders) 
become concerned, or more intensively affected, in the future. This is the case in particular for 
those  sectors  where,  as  in  the  case  of  steel,  important  overcapacities  exist.  Furthermore, 
China’s 13th five year plan focuses on changes in China’s society and the Chinese economy. 
Thus,  nurturing  strategic  industries  such  as  environmental,  biotechnology,  IT,  smart 
manufacturing,  high-tech  equipment,  and  new  energy  industries  together  with  support  and 
upgrading  of  traditional  industries  are  a  priority.  Regarding  exports,  the  plan  focuses  on 
upgrading  China’s  position  in  global  value  chains  by  cultivating  strengths  in  technology, 
standards,  brands,  quality  and  service.  The  potential  for  overcapacities  developing  in  those 
sectors is therefore not negligible. 

Second, trade defence investigations and measures also affect European industries that use the 
products subject to investigation/measures as an input for their own manufacturing activities. 
These  downstream  user  industries  are  not  very  keen  on  AD/AS  measures  because  they 
typically  result  in  higher  input  prices  (either  because  AD  or  AS  duties  have  to  be  paid,  or 
because the EU industry benefitting from  measures has increased its prices, or  because  it is 
simply costly to switch to sources of supply in other third countries). Examples are users of 
coated  steel,  or  installers  of  solar  panels  who,  once  a  TD  measure  is  in  place,  have  to  pay 
higher prices for the imported product they use, or switch to other sources of supply, which 
are also higher priced. However, in many cases actual price increases are significantly lower 
than  the  level  of  the  duty  imposed,  either  because  the  product  is  also  available  from  other 
sources,  or,  because  the  share  of  input  under  duties  represents  a  minor  component  of  the 
product.  

Third,  in  general,  the  industry  upstream  of  the  product  under  measures  benefits  from  TD 
measures.  Indeed,  the  EU  industry  benefitting  from  the  measures  will  maintain  or  even 
increase  their  output  and  thus,  the  demand  for  the  upstream  product  using  EU  inputs  is 
preserved (e.g. kali mines benefit from AD measures on ammonium nitrate).  

2.5.2. 

Importers, traders, wholesalers, retailers 

17 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
This  group  of  importers,  traders,  wholesalers  and  retailers  represents  the  link  between 
producers (in the EU or outside) and the industrial user or consumer.  In fact, it is one of the 
EU’s largest non-financial business sectors creating 10 million jobs and accounting for over 
22% of all turnover generated.  

While  traders  typically  source  both  abroad  and  domestically,  importers  only  source  abroad. 
However, their situation is similar as importers usually also have several sources of supply at 
their disposal, including some that are not subject to AD/AS duties. In general, this sector is 
against TD measures, as they claim that an AD/AS duty can often not be reflected in prices 
and  thus  reduces  their  margin.  Furthermore,  changing  sources  of  supply  (to  avoid  suppliers 
that are subject to AD/AS duties) is time consuming and costly.  

However, in certain circumstances importers and traders are not against measures since they 
benefit from a continued source of supply in the EU. In particular in sectors such as metals, 
they  trade  both  the  EU  manufactured  and  imported  steel.  The  share  of  imported  metals  is 
however only about 13% (2015). These intermediate companies provide additional processing 
and services. 

2.5.3. 

SME’s  

SME’s  represent  the  back-bone  of  the  EU’s  economy  accounting  for  67%  of  total 
employment  in  the  EU  in  201415.  Almost  all  SMEs  (93%)  are  micro  enterprises  employing 
less than ten people. Micro SME’s are normally not directly impacted by TD measures with 
the exception of some cases such as salmon from Norway or tableware from China.  

However,  micro  SMEs  are  potential  suppliers  of  industries  that  compete  with  the  dumped 
imports or use the dumped imports as intermediate products. They may also themselves use 
the dumped imports or the EU produced product competing with the dumped imports.  

2.5.4.  EU citizens  

EU workers in the sectors concerned benefit from TD measures, since such measures can help 
improve  the  situation  of  an  industry  or  a  sector  concerned,  or  even  ensure  its  survival,  and 
thus  help  preserve  or  create  jobs  in  the  EU.  The  same  is  true  with  regard  to  workers  in 
upstream  sectors,  i.e.  the  suppliers  of  the  Union  industry.  By  contrast,  EU  workers  in 
downstream sectors may be impacted negatively, because higher input prices may also mean 
less  growth  (or  even  loss  of  turnover)  in  such  downstream  industries  and  hence  also  less 
employment opportunities in downstream sectors.  

Potential consumers of the imported dumped products will in some cases have to pay higher 
prices.  However,  typically  products  subject  to  TD  measures  are  rather  destined  for  the 
industrial  user.  Often  they  cover  semi-finished  products  that  are  further  processed  by  the 
down-stream  industry  in  the  EU  or  serve as  an  input  for the  finished  product.  Therefore,  in 

15 Source:  Annual Report on European SMEs 2014/2015 

18 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
many  cases  any  AD/AS  duty  imposed  on  one  input  product  is  absorbed  in  the  total  cost  of 
production of the final product and not necessarily, or not fully reflected in the final price for 
the  consumer  (e.g.  coated  steel  used  to  produce  washing  machines,  stainless  steel  fasteners 
used in cars, machines, etc., aluminium wheels used for cars, motorbikes).  

In rare cases consumer products such as shoes, tableware or bicycles are concerned by AD/AS 
measures, which might have an impact on the price for the end user. However, the effect of 
duties in such cases is rather felt at the level of importers and distributors and not by the final 
consumers.  For  example,  in  the  case  of  the  anti-dumping  investigation  on  shoes,  a  duty  of 
1,60 € was imposed on the average import price of a pair of shoes of 10€. However, it was 
found  in  that  investigation  that  the  average  sales  prices  of  the  shoes  (including  margins  for 
importers,  wholesalers  and  retailers  and  branding)  was  30€  and  more,  and  thus  the  duty 
became negligible at the consumer level.   

Furthermore, as explained above, products covered by TD measures are narrowly defined and 
very  specific.  Therefore,  any  price  increase  as  a  result  of  a  duty  is  limited  to  that  specific 
product  and  does  not  affect  the  broader  sector  (e.g.  the  duty  on  tableware  does  not  have  an 
impact on other ceramics products such as tiles or sanitary ware).  

The  purpose  of  TD  measures  is  to  restore  fair  trading  conditions  and  not  limiting  imports. 
Any  issues  regarding  supply  and  consumer  choice  are  dealt  with  in  the  Union  interest  test, 
where  the  interests  of  all  interested  parties  are  taken  into  account.    Experience  gathered  in 
Union interest investigations, has confirmed that in the vast majority of cases, consumers are 
not or only marginally impacted by TD measures. Consumer safety issues are dealt with under 
other relevant EU legislation, not TDI.  

2.6. What is the EU dimension of the problem?  

One way of assessing the importance of trade defence for the EU as a whole, is looking at the 
trade volume affected by measures as compared to the total trade volume. Out of total EU – 
China  trade,  around  2%  is  subject  to  measures  (or  up  to  5%  when  taking  into  account  that 
trade flows typically decrease after imposition of measures). Given the value of trade affected, 
any  impact  of  a  change  in  methodology  to  calculate  dumping  would  have  very  little  or  no 
impact in terms of EU GDP.  
A possible overall impact of the existing TDI measures on Chinese products, maybe measured 
on  employment:  out  of  50  million  industrial  jobs  in  the  EU,  231  000  jobs  (or  0,4%)  are 
directly linked to products currently subject to TD measures regarding China16.    

Yet, the full dimension of the impact of trade defence is not adequately reflected on a macro-
economic level. AD and AS measures affect products that are precisely and narrowly defined, 
and  are  thus  very  specific.  Hence,  TDI  have  primarily  a  micro-economic  dimension. 

16 This figure is derived from the detailed information which the Commission has gathered in the context of the 
investigations leading to the current TD measures in place. 

19 

 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
However, they can be substantial for a specific industry or a specific sector at a certain point 
in time, and therefore effective TD measures could be essential to that industry's survival.  

An  illustrative  example  of  a  sector  that  relies  on  effective  TDI  in  order  to  face  unfair 
competition, particularly in the recent past, is the steel sector. The EU steel industry provides 
around  330,000  jobs  in  500  production  sites  in  24  Member  States  and  generates  an  annual 
turnover of around EUR 170 billion, which corresponds to around 1.3% of EU gross domestic 
product17.  Therefore,  in  strategic  sectors,  unfairly  traded  imports  can  result  in  site  closures 
and related job losses, and can be very detrimental to the sector concerned, and also, albeit to 
a  lesser  extent,  to  the  EU  economy  as  a  whole.  Effective  TD  measures  can  play  role  in 
addressing such situations. 

Moreover,  some  industries  benefitting  from  measures,  such  as  the  steel  industry,  are  an 
important  part  of  European  value  chains.  In  certain  situations,  without  TD  measures,  the 
production  of  certain  products  in  the  chain  could  be  put  at  risk.  This  would  also  have 
implications  for  the  industry  up-  and  downstream  of  these  products,  and  ultimately  also 
negatively affect the top of the chain, i.e. R&D and innovation. For example, the AD measure 
on coated steel is beneficial for the up-stream products, hot rolled flat steel and cold rolled flat 
steel, since it ensures its continued demand. In such situations, the AD measure also ensures 
reliable sources of supply in the EU for the downstream operators, e.g. automotive and white 
goods industries. More importantly, keeping production of high value added products in the 
EU, contributes to maintaining R&D and innovation in the EU. 

3.  WHY SHOULD THE EU ACT? 

Under  Article  5(3)  TEU,  the  subsidiarity  principle  does  not  apply  in  areas  of  exclusive  EU 
competence.  According  to  Article  3.1(e)  of  the  Treaty  on  the  Functioning  of  the  European 
Union (TFEU), the common commercial policy is an exclusive competence of the EU. Article 
207 TFEU further states that “measures to protect trade such as those to be taken in the event 
of dumping or subsidies” shall be based on the uniform principles of the common commercial 
policy.  The  subsidiarity  principle  therefore  does  not  apply.  The  EU  is  required  to  ensure 
compliance with EU international obligations.  

4.  OBJECTIVES: WHAT SHOULD BE ACHIEVED? 

According to Article 3.5 of the Treaty of the European Union (TEU), in its relations with the 
wider world the Union shall contribute to free and fair trade18. According to Articles 2, 3(5), 

17 http://www.eurofer.org/ 
18 Article 3.5 of the Treaty on the European Union: "In its relations with the wider world, the Union shall uphold 
and promote its values and interests and contribute to the protection of its citizens. It shall contribute to peace, 
security, the sustainable development of the Earth, solidarity and mutual respect among peoples, free and fair 
trade, eradication of poverty and the protection of human rights, in particular the rights of the child, as well as 
to  the  strict  observance  and  the  development  of  international  law,  including  respect  for  the  principles  of  the 
United Nations Charter". 

20 

 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
 
21(1),  21(2)  TEU  and  Article  216(2)  TFEU,  the  EU  is  founded  upon  the  rule  of  law  and 
contributes  to  the  observance  and  development  of  international  law,  which  binds  the  EU 
institutions.  

Trade is a key element in the EU’s efforts to reduce unemployment. It is a major driver for 
growth  and  jobs  provided  that  any  negative  effects  of  unfair  trade  can  be  effectively 
counteracted.  

4.1. General objectives 

-  promote free and fair trade (G1); 

- 

increase EU competitiveness and create/preserve  EU employment (G2). 

4.2. Specific objectives 

-  deal  adequately  with  the  expiry  of  certain  provisions  of  Section  15  of  China’s 
Accession Protocol to the WTO, and taking into account other countries in a similar 
situation (S1); 

-  ensure continued effectiveness of the EU’s trade defence instruments (S2); 

-  provide an effective response to the persisting distortions in the Chinese economy and 

in other NME countries (S3); 

-  ensure an adequate remedy to offset injury caused by dumped/subsidised, i.e. unfairly 

traded, imports (S4);  

-  maintain strong ties with our trading partners and in particular with China, based on 

mutual interests (S5). 

4.3. Consistency with other EU policies 

The objectives are fully in line with the principles of the Treaty of the European Union which 
provide that the EU shall, amongst others, “promote free and fair trade” whilst contributing to 
the observance and development of international law. 

Article  206  of  the  Treaty  on  the  functioning  of  the  European  Union:  "By  establishing  a  customs  union  in 
accordance  with  articles  28  to  32,  the  Union  shall  contribute,  in  the  common  interest,  to  the  harmonious 
development  of  world  trade,  the  progressive  abolition  of  restrictions  on  international  trade  and  on  foreign 
investment, and the lowering of customs and other barriers". 
Article 207 (1) of the Treaty on the functioning of the European Union: "[…] The common commercial policy 
shall be conducted in the context of the principles and objectives of the Union's external action". 

21 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                                                                                                                         
 
There  is  also  full  compatibility  with  the  goals  of  the  Communication:  Trade  for  all,  which 
pleads for stronger enforcement of the EU’s rights19 and that the EU also needs to stand firm 
against unfair trade practices through anti-dumping and anti-subsidy measures.  

It  is  also  in  line  with  the  goals  of  the  EU’s  2020  Communication:  A  strategy  for  smart, 
sustainable  and  inclusive  growth,  and  in  particular  with  its  priority  to  foster  a  high-
employment  economy  delivering  social  and  territorial  cohesion20.  Furthermore,  it  also 
contributes to one of its flagship initiatives: “An industrial policy for the globalisation era" to 
improve  the  business  environment,  notably  for  SMEs,  and  to  support  the  development  of  a 
strong and sustainable industrial base able to compete globally21.  

The objectives are also in line with the Communication on Trade, Growth, and World Affairs, 
which advocates with regard to China (the EU’s second largest trading partner after the US), 
for policies that are more in line with market economy rules and seek to address the sources 
of the current major imbalances22.   

The  objectives  are  also  fully  consistent  with  the  first  of  the  ten  priorities  of  the  current 
Commission: boosting, jobs, growth and investment23. 

Moreover,  the  Steel  Communication  of  16  March  201624  calls  for  “Acting  together  to 
strengthen  our  defences  against  unfair  trade  practices.”  It  notably  emphasises:  "The 
Commission is imposing a record number of trade defence measures to offset the detrimental 
effect of dumping on Europe’s steel industry. The efficiency and effectiveness of our action 
can  however  be  significantly  enhanced,  accelerated  and  further  improved  if  Member  States 
support the Commission’s efforts”.  

Finally, the initiative is fully in line with the EU Strategy on China25that has as objectives: (i) 
to increase the effectiveness of the EU as a global actor, in line with the Commission's policy 
guidelines,  as  expressed  via  the  EU-China  strategic  partnership  at  bilateral  and  multilateral 
level;  (ii)  to  define  the  EU's  own  interests  in  its  evolving  relationship  with  China;  (iii)  to 
propose  how  those  interests  can  best  be  promoted,  and;  (iv)  to  identify  new  areas  of 
cooperation with China in an increasingly challenging world26.  

5.  POLICY OPTIONS: WHAT ARE THE VARIOUS OPTIONS TO ACHIEVE THE 

OBJECTIVES 

19 http://trade.ec.europa.eu/doclib/docs/2015/october/tradoc_153846.pdf, page 15 
20 COM(2010)2020, p.3. 
21 COM(2010)2020, p.4. 
22 COM/2010)612, p.11 
23 https://ec.europa.eu/priorities/index_en 
24 ec.europa.eu/DocsRoom/documents/15947/attachments/1/translations/en/.../native 
25

Joint Communication to the European Parliament and the Council "Elements for a new EU strategy on China", 

    JOIN(2016) 30 final 
26 http://ec.europa.eu/smart-regulation/roadmaps/docs/2016_eeas_006_eu_strategy_china_en.pdf 

22 

 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
5.1. Identifying the policy options 

In light of the envisaged changes three policy options have been identified, which range from 
leaving  the  current  legislation  and  practice  unchanged  to  developing  an  alternative 
methodology and provisions to ensure the continued effectiveness of the EU’s TDI.   

  Policy Option 1: “Baseline”- no change, neither in legislation nor in practice; 

  Policy Option 2: Replacing the NME methodology by the standard methodology;  

  Policy Option 3: New methodology allowing to effectively capture the non-market 
distortions coupled with transition periods and a further strengthening of the trade 
defence instruments.  

5.2. Description of the Policy Options 

5.2.1.  Policy Option 1 – “Baseline”  

Option  1  would  leave  the  current  EU  legislation  and  practice,  regarding  AD  and  AS 
investigations unchanged. The Commission would not make a legislative proposal. 

This  means  that  for  the  calculation  of  the  dumping  margin  regarding  China,  the  analogue 
country methodology would continue to be mandatory in all cases concerning China, i.e. data 
for normal value would continue to be based on prices and costs in a third country that is a 
market economy (the so-called analogue country). Furthermore, the LDR would continue to 
be used in all cases (unless the TDI modernisation proposal is adopted) and newly found AS 
schemes during an investigation would only be reflected in the level of the AS duty imposed 
if an extended complaint is lodged and a new notice of initiation is published. 

While  a  superficial  reading  of  this  option  might  suggest  that  it  is  tantamount  to  simply 
maintaining the status quo, this is however not the case. As described in the text of China’s 
Accession  Protocol  (annex  5),  at  least  certain  provisions  of  the  Protocol  will  expire  on  11 
December 2016 in  any event, and this  expiry will ipso facto entail  a number of changes, in 
particular in the legal and political environment as explained in detail in section 6.1.  

5.2.2.  Policy Option 2: Replacing the NME methodology by the standard 

methodology  

Under current rules, for NME countries, the NME methodology is used for the calculation of 
the dumping  margin  (normal value is based on costs and prices in another market economy 
third  country,  the  so-called  ‘analogue  country’).  For  NME  countries,  which  are  WTO 
members, such as China, the EU AD legislation provides that producers who can prove that 
they operate under market economy circumstances, their own costs and prices are used as a 
basis for the dumping margin calculation.  

23 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Under option 2, these rules would no longer apply. Instead, by default, the NME methodology 
would  be  replaced  solely  by  the  standard  methodology  for  China.  This  means  that  Chinese 
producers’  own  costs  and  prices,  as  found,  would  systematically  be  used  as  a  basis  for  the 
dumping margin calculation.  

This  option  corresponds  to  the  “automatic  granting  of  market  economy  status”,  as  it  would 
mean  treating  China  fully  as  any  other  WTO  member  market  economy  country.  The 
Commission would make a legislative proposal. 

The circumstances in which an exception to the standard methodology would be available on 
a case by case basis would be those set out in the WTO Anti-dumping Agreement and the EU 
Basic AD Regulation. There would have to be a particular market situation, and it would have 
to be demonstrated that Chinese costs should not be used, but rather replaced with data and 
evidence from a third country.   

5.2.3.  Policy  Option  3:  New  methodology  allowing  to  capture  the  non-market 
distortions  coupled  with  transition  periods  and  further  strengthening  of  the 
trade defence instruments 

In  order  to  ensure  the  continued  effectiveness  of  the  EU’s  TDI  on  the  one  hand,  and  to 
adequately  deal  with  the  expiry  of  certain  provisions  of  Section  15  of  China’s  Protocol  of 
Accession  to  the  WTO  on  the  other  hand,  an  alternative  methodology  would  be  developed, 
coupled with transition periods and substantial strengthening of the trade defence instruments. 

Policy  option  3  contains  three  elements.  These  elements  aim  at  ensuring  the  continued 
effectiveness  of  the  TDI,    further  strengthening  them  and  improving  the  effectiveness  in 
dealing with subsidies discovered in the course of AS investigations. The Commission would 
make a legislative proposal. 

Dealing with distortions: 
Clarify  provisions  in  the  EU  AD  legislation  designed  to  deal  with  significant  distortions 
affecting prices and/or costs of the exporters in the country of export. These already foresee 
that, where such distortions create a ‘particular market situation’:  

(a)   sales  prices  in  the  domestic  market  of  the  exporting  country  are  rejected  and  normal 

value constructed on the basis of costs, and  

(b)   costs of exporters affected by such a ‘particular market situation’ are replaced by costs 

in another representative market.    

The  situation  that  prevails  in  China,  on  the  basis  of  the  current  Chinese  socio-economic 
system, is characterised by economic distortions as compared with the normal functioning of 
a  market  economy  such  as  the  EU,  which  effect  deeply  and  systematically  the  structure  of 
costs  and  prices  in  the  Chinese  economy.  It  cannot  be  excluded,  however,  that  a  similar 
situation exists or develops in other countries. 

24 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
The  clarification  would  specify  the  basis  for  establishing  situations  where  such  deep 
economic  distortions  in  the  exporting  country  exist.  For  instance,  relevant  criteria  could 
include  government  policies  and  involvement  affecting  costs  of  production  (e.g.  raw 
materials,  labour);  significant  presence  of  state-owned  enterprises  distorting  free  market 
forces with respect to prices or costs; public policies or measures discriminating in favour of 
domestic suppliers or otherwise influencing free market forces; or access to finance granted 
by institutions implementing public policy objectives.  

In  order  to  identify  such  distortions  in  the  exporting  country,  the  Commission  may  issue  a 
report  describing  the  specific  situation  concerning  these  criteria  in  a  certain  country  and/or 
sector.  It is important to note that the TDI system  would remain to  be complaint  based, i.e. 
investigations are normally only initiated on the basis of a valid and justified complaint by the 
EU industry. 

All interested parties would have access to the report and have the possibility to comment on 
the  findings  therein.  This  report  could  become  part  of  a  particular  investigation  by  the 
Commission and would become part of the file of each individual investigation. It could also 
be a public document. This  mechanism would mean that the Commission would effectively 
assume the burden of proof in determining whether situations of deep distortions would exist. 

Concretely, this would allow the EU investigating authority to investigate distortions existing 
in  the  whole  Chinese  economy  and/or  certain  sectors  –  as  well  as  in  other  countries  in  a 
similar  situation.  The  EU  investigating  authority  may  then  conclude  that  it  would  be 
necessary to calculate dumping not on the basis of domestic sales prices but on the basis of 
domestic costs of production (adjusted where necessary by using costs in a third country or 
international benchmarks). 

In case of a finding of pervasive distortions, affecting the entire structure of costs throughout 
sectors or the economy as a whole, alternative cost sources than those in the exporting country 
would be used for the determination of normal value.  

Many  stakeholders  have  requested  that  we  coordinate  closely  with  our  major  international 
partners. While other main users of the instruments globally have different laws and practices, 
nevertheless this new methodology would bring the EU system closer to that of some of our 
international partners, including the US. 

Transition periods: 
It is recalled that TDI measures are normally imposed for a duration of five years, unless they 
are modified as a result of an interim review before the end of the five year period. Interim 
reviews can only be carried out if there is a change in circumstances.  

Under this option, it would be clarified that the expiry of certain provisions of Section 15 of 
China’s  Protocol  of  Accession  to  the  WTO  does  not  constitute  a  change  in  circumstances, 
which  would  merit  the  initiation  of  an  interim  review.  Expiry  reviews  and  interim  reviews 
would then be carried out applying the existing principle that, in the absence of a change in 
factual  circumstances,  the  methodology  of  the  initial  investigation  is  applied.  Indeed,  in  the 
likely event that circumstances in China have not changed since the original investigation, as 
25 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
China still does not function as a market economy, the analogue country methodology would 
be applied in interim reviews and expiry reviews. 

Furthermore, existing provisions would be amended to foresee that the initiation of an interim  
(or newcomer) review linked to the expiry of Section 15 (a) (ii) of China’s Accession Protocol 
to the WTO, can be requested only at the time of initiation of an expiry review. Other interim 
reviews would not be affected by this constraint.  

Amending the AS legislation:   
The AS legislation would be amended in order to allow for any new subsidy schemes found in 
the  course  of  an  AS  investigation  to  be  investigated,  subject  to  due  process.  Consequently, 
new schemes would also be included in the calculation of the final AS duty imposed. Thus, 
the AS duty imposed would more accurately reflect the actual level of subsidisation benefiting 
the  exporter  in  the  export  market.  A  study  on  subsidies  in  China  is  ongoing  and  will 
complement any legislative change. 

6.  IMPACT ANALYSIS  

A  thorough  analysis  was  conducted  to  assess  the  impact  of  the  different  options  identified. 
Then, options 2 and 3 were compared to option 1 – the baseline. The assessment is based on 
the Commission services’ own analysis and practical experience, on the results of the public 
consultation  of  stakeholders,  the  inputs  received  from  a  stakeholder  conference  specifically 
organised to that effect, and on an independent economic evaluation study.  

Public consultation 

A  public  consultation  was  held  on  line  for  ten  weeks.  In  anticipation  of  a  possible  large 
number of replies and in order to ensure an objective and coherent evaluation of the responses 
received,  the  on-line  consultation  contained  only  closed  questions.  Furthermore,  various 
stakeholders submitted position papers and comments, either in the framework of the public 
consultation or separately. In addition and in order to give stakeholders a further opportunity 
to  present  their  views  and  have  the  broadest  and  most  diverse  feed-back,  the  Commission 
services organised a stakeholder conference, which was attended by around 300 participants. 
During  the  debate  all  stakeholders  who  so  wished  intervened.  The  views  expressed 
represented  the  whole  spectrum  of  opinions  on  the  subject.  The  Commission  services  also 
organised, a dedicated meeting with the EU social partners.  

In the context of the online consultation, almost 5300 replies were received. The analysis of 
these replies showed that a large number were identical and submitted on behalf of the same 
entity. These ranged from two to more than 900 identical replies for one entity. The report on 
the  public  consultation  and  the  figures  indicated  in  this  report  counted  every  reply  as  an 
individual one.  Please  see  more details  regarding procedure and the consultation  strategy in 
annexes 1 and 2.   

26 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quantitative Models 

The quantitative analysis of options 2 and 3 was done by an external team of experts27.   

The  European  Commission  provided  the  authors  with  estimates  of  AD  tariffs,  which  would 
result  from  a  dumping  calculation  under  options  2  and  3  respectively.  On  this  basis,  the 
external experts calculated, for each option, the difference between the AD tariffs under the 
option  at  hand  and  the  AD  tariff  under  the  baseline  scenario,  i.e.  under  the  current 
methodology.  This  difference  provided  the  input  for  the  remainder  of  the  quantitative 
analysis. 

The external experts then proceeded in four steps: 

First,  they  calculated  how  a  variation  in  AD  tariffs  affected  the  volume  of  Chinese  imports 
into the EU, and how a change in import volume affected the level of employment in the EU 
in  those  industries,  which  manufacture  the  products  under  AD  tariffs.  On  this  basis  a 
relationship between a variation in AD tariffs and a variation in employment in the EU was 
identified. 

Secondly,  they  calculated  the  impact  of  a  variation  of  AD  tariffs  on  the  EU  industry  as  a 
whole. To this end, the authors estimated, which additional sectors could become subject to 
dumping by China in the future.  

In  a  third  and  fourth  step,  the  external  experts  calculated  the  impact  of  a  variation  in  AD 
tariffs,  not  just  for  those  products  or  sectors  currently  affected  or  possibly  affected  in  the 
future, but also for the related upstream and downstream industries. This additional step gave 
an estimation of the indirect effects of a variation of AD tariffs on the entire EU economy.  

As is  the case with  all economic analyses, the results are dependent  on critical assumptions 
and are also otherwise subject to a degree of uncertainty. They indicate orders of magnitude to 
be expected with a reasonable confidence rather than precise predictions to be expected with 
certainty. For this reason, the external study worked with two sets of parameters throughout, 
allowing the results to be presented as ranges as opposed to point estimates. Where possible, 
these  ranges  of  results  are  presented  in  sections  6.2  and  6.3.  However,  where  results  are 
broken down to individual sectors and Member States only the upper bound of the estimates is 
presented to avoid complicating the result tables28.  

Overall impacts 

Regarding the impact on the environment, the starting point is that TD measures affect only a 
small share of imports from China (less than 2% of total trade or less than 5% when taking 

27 The full report of the external study is attached as annex 8 to this IAR. 

28 The full range of results is available in annex 8. 

27 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
 
into  account  the  reduction  of  trade  due  to  the  measures  imposed).    Two  areas  can  be 
distinguished, i.e. production and transport/distribution. 

One may argue that while higher AD duties (option 3) may lead to slightly less production in 
China and slightly  more production in  the EU, the impact for the environment in  the EU is 
negative.  However,  since  environmental  standards  are  often  much  higher  in  the  EU  than  in 
China, one could also argue that the overall impact of AD duties on the environment is very 
likely to be positive as evidenced by the fact that 80% of China’s industry is still coal based, 
whereas  in  the  EU  28%.  In  the  public  consultation,  in  relation  to  option  2,  a  number  of 
stakeholders  expressed  the  concern  that  higher  production  in  China  for  exports  to  the  EU, 
resulting possibly from lower anti-dumping measures, would have an overall negative impact 
on the environment, precisely because of the difference in emission standards between the EU 
and China. Significant imports from China may contribute to climate change, as more goods 
would be shipped from China to the EU, increasing CO2 output and thus carbon footprint. 

According  to  some  stakeholders,  without  any  measures  to  reduce  pollution  from  ships,  by 
2020 shipping will be the biggest single emitter of air pollution in Europe, even surpassing the 
emissions from all land-based sources together29. It is however very difficult to quantify, the 
impact of effective TDI on the environment.   

As  regards  human  rights,  they  are  mainly  discussed  between  the  EU  and  China  in  the 
framework of both their political dialogue as well as a specific Human Rights Dialogue.  

TD  instruments  are  generally  considered  as  technical  instruments.  Their  scope  is  limited  to 
restoring fair trading conditions, where these have been compromised by unfair practices such 
as  dumping  or  subsidisation.  The  application  and  use  of  the  instruments  does  not  reach 
beyond  this  limited  scope.  The  instruments  are  guided  by  technical  and  factual  criteria  and 
should, as far as possible, remain free of political considerations.  

As far as  the impact on  SMEs is  concerned, SMEs represent an important  part  of the EU’s 
economy. In 2014 SMEs accounted for 67% of employment (90 million people) and 99% of 
businesses in the non-financial  sector.  About three  quarters of SMEs are active in five key 
sectors:  wholesale  and  retail  trade,  manufacturing,  construction,  business  services  and 
accommodation  and  food  services.  SMEs  are  present  at  all  levels  of  the  value  chain  as 
producers, users or importers, retailers/traders.  

Although, overall SMEs are recovering from the economic and financial crisis in 2008, their 
situation varies  among Member States  and sectors. A more detailed analysis at  the Member 
States  level  shows  that  SMEs  in  only  seven  countries  (AT,  BE,  DE,  MT,  LU,  SE  and  UK) 
have fully recovered in terms of the number of SMEs, value added and employment.  In terms 
of  sectors,  employment  in  SMEs  in  construction  and  manufacturing  were  in  2014  still  17% 
and 11% below 2008 levels.  

Employment  creation  was  particularly  strong  from  2008  to  2014  in  knowledge-intensive 
services. This was the case across all three SME size classes (i.e. micro, small, and medium-

29 http://www.transportenvironment.org/what-we-do/shipping/air-pollution-ships 

28 

 
 
 
 
 
 
 
 
 
 
 
 
                                                 
sized firms). In contrast, all of the four types of technology-intensive goods producing sectors 
(ranging from low technology to high technology) showed net job losses between 2008 and 
2013. During this period the less technology-intensive SMEs lost a higher proportion of their 
jobs than the more technology-intensive SMEs. In 2014, in terms of employment, the goods-
producing sectors stagnated. 

This  shows  that  the  development  of  economic  activities  of  SMEs  reflects  that  of  the  EU 
industry  as  a  whole,  i.e.  a  move  from  low  end  to  high  end  manufacturing  and  from 
manufacturing to services. Similarly, the SME sectors most likely to be targeted by dumping 
practices in the future are largely the same ones, as identified for the EU industry as a whole. 
However, due to their smaller size and fragmentation, SME’s tend to be more vulnerable to 
change  than  larger  enterprises.  Therefore,  any  weakening  of  the  TDI  (option  2)  can  be 
expected to impact SME’s more than larger companies. 

Typically, as explained in section 2.5.3, SME’s and in particular micro SME’s are often not 
directly  affected  by  TD  measures.  While,  the  macro  economic  impact  of  TDI  is  relatively 
small, TD measures can be crucial for a sector or a region, which is also true for SMEs. For 
example, the AD measures on bicycles helped maintaining a high end bicycle production in 
the EU with around 70.000 direct and indirect jobs in 20 Member States. The AD measures 
on tableware and ceramic tiles were essential for the sector and it is noted that many of the 
tableware  producers  are  located  in  regions  that  are  generally  less  thriving  (Sassuolo,  Stoke-
on-Trent,  Castellon,  Limoges,  Aveiro,  Civita  Castellana,  Saarland).  Around  100.000  direct 
jobs, of which the majority in SMEs, are benefitting directly from measures in the ceramics 
sector.  These  measures  also  helped  securing  jobs  in  the  upstream  (kaolin  mines)  and 
downstream industry (ceramics related machinery in Italy).  

In  general,  TD  measures  affect  businesses  at  various  levels  of  the  value  chain  in  different 
ways.  Typically,  TDI  are  not  easy  instruments  for  SMEs.  For  producing  SMEs  who  seek 
relief from the effects of dumped/subsidised imports, access to TDI is complicated, as data for 
the Union industry as a whole needs to be compiled. The compilation of meaningful data can 
be a difficult exercise given that a sector can consist of hundreds of companies spread over 
many Member States30.   

For  SMEs  in  the  import,  wholesale  and  retail  business,  TD  measures  represent  other 
challenges. When provisional measures are imposed they might need to find new sources of 
supply either  outside the  EU (but not  subject to the AD duty)  or  inside the EU because  the 
imports might no longer be competitive once the injurious dumping or subsidization is offset 
by an AD/AS duty. This type of adaptation comes with a certain cost. Moreover, if this group 
of  economic  operators  have  been  negligent  in  informing  themselves  about  any  on-going 
investigation they might be taken by surprise by the imposition of a duty in relation to goods 
that  have  already  been  ordered  or  are  already  being  shipped.  The  companies  concerned  are 
obliged to pay the duty on those imports.  

30 The Proposal of the Commission to modernise the TDI (COM(2013) 192 final) contains several elements to 

facilitate access to TDI for SMEs.  

29 

 
 
 
 
 
 
 
 
 
 
                                                 
While  TD  measures  primarily  aim  at  remedying  injury  caused  to  the  EU  industry by  unfair 
trading  practices,  user  industries  can  also  be  confronted  with  the  negative  effects  of  TD 
measures.  Note  however  that  allegations  made  to  this  effect  in  investigations  are,  after 
examination, often unfounded overall.   

To summarise, it appears that lower AD duties (option 2), are likely to impact SME’s more 
negatively than larger companies. This was confirmed by more than two thirds of respondents 
in the public consultation. At the same time more than two thirds of companies that responded 
were large companies with more than 250 employees.  

The  analysis  regarding  the  economic  and  social  impacts  is  based  on  an  independent 
economic  study  (please  see  annex  8),  which  covers  in  particular  impacts  on  employment. 
These  are  the  economic  effects  that  are  best  measurable  and  which  also  provide  a  good 
indication of the social dimension. 

It is important to note that the TDI system is complaint based, i.e. investigations are normally 
only initiated on the basis of a valid and justified complaint by the EU industry, and that AD 
or  AS  duties  can  only  be  imposed  if  the  findings  of  a  thorough  investigation  show  that  the 
conditions  to  impose  such  duties  are  met.  Therefore,  it  is  difficult  to  predict  with  certainty 
what may happen in the future without knowing which complaints may be brought and what 
the result of the ensuing investigations might be.  

In  addition,  it  must  be  borne  in  mind  that  the  central  parameter  in  the  estimation  of  the 
impacts is not the level of tariff that the EU may maintain overall in relation to any given third 
country.  The  central  parameter  is  the  level  of  additional  duties,  beyond  the  normal  tariffs 
applicable, that may or may not be imposed following an AD/AS investigation.  

Sources of Data  

The data used in this analysis is based on a variety of sources. The employment data by case 
and  Member  State  is  internal  Commission  data,  which  is  based  on  the  data  collected  in  the 
context of AD investigations. The employment currently covered by the measures in force is 
the one found during the investigations, to be linked to the production of the products under 
anti-dumping measures.  

The data on duty rates is also based on internal Commission data, which is company specific 
and collected in the course of investigations. Some of this data has also been adjusted so that 
it can be used in a context, which is different from its original intended goal. Other important 
sources of data are Eurostat Structural Business Statistics, COMEXT, WIOD and UNSTATS.

6.1. Impacts of Policy Option 1 – “Baseline” 

30 

 
 
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
 
 
It  is  important  to  note  that  option  1  is  not  equivalent  to  the  status  quo.  Indeed,  certain 
provisions of China’s Accession Protocol will definitely expire on 11 December 2016, which 
will undoubtedly have an impact, in particular on the legal and political environment.   

The  current  system  has  the  advantage  of  being  well  established  and  well  known  by  all 
stakeholders  concerned.  However,  the  effectiveness  of  the  current  system  has  also  shown 
important limitations.   

Duties imposed by the EU, which are often based on the level of the injury margin, are often 
lower  than  those  imposed  by  other  WTO  members,  who  often  do  not  apply  the  LDR.  This 
difference  in  the  duty  levels  can  result  in  trade  deflection,  the  impact  of  which  is  however 
very difficult to quantify.  

Regarding  the  analogue  country  methodology,  in  the  public  consultation,  a  vast  majority  of 
respondents claim that it has been effective in addressing situations where there are significant 
distortions  in  costs/prices  in  the  exporting  country.  Other  stakeholders  consider  that  the 
analogue country methodology is in certain cases too rigid and in other cases it may lead to 
inflated  dumping  margins.  The  impact  of  both  situations  is  however  also  very  difficult  to 
quantify.  

It is recalled that China is the EU’s second biggest trading partner with a trade volume of 470 
billion € in goods and 50 billion € in services in 2014. In terms of foreign direct investment, 
China is in 9th position, with 120 billion € EU investments in China in 2012. 3 million jobs are 
supported by EU exports to China.  

China  has  already  signalled  on  several  official  occasions  that  it  expects  that  the  EU  and  all 
other  WTO  members  stop  using  of  the  analogue  country  methodology,  in  cases  involving 
China as from December 2016.  

Hence,  option  1  would  most  likely  be  subject  to  litigation,  both  before  the  WTO  and  the 
European Court of Justice. The result and effects of such litigation cannot currently be known. 
In terms of procedure, it would most likely mean litigation before a WTO Panel and possibly 
in front of the Appellate Body. The duration of proceedings in the WTO would typically take 
three  to  five  years.  If  the  EU  were  found  to  be  non-compliant  in  the  implementation 
proceeding, China may then again respond by suspending trade concessions. The purpose of 
the  suspension  of  concessions  is  to  induce  compliance  and  the  level  depends  on  the  trade 
impact. Given the substantial volume of trade between the EU and China, the negative effect 
for EU companies could be considerable. No detailed analysis can be provided on the impact 
per Member State or industry as this would depend on the particular requests for suspension 
of concessions that China would make.  

Litigation before the Courts in Luxembourg would depend on how a case is presented. If a 
case  is  lodged  by  one  of  the  privileged  applicants  (Member  States)  or  via  a  request  for  a 
preliminary ruling, it would go straight to the European Court of Justice and would normally 
take around 2 to 3 years. If a case arrives at the General Court, litigation via an application 
e.g. by an exporter seeking the annulment of a regulation imposing an anti-dumping duty, the 
litigation would last longer (around 4 years) because it would potentially include an appeal. It 

31 

 
 
 
 
 
 
 
 
 
 
 
 
should also be  noted that, in case of annulment by the ECJ,  duties would have to  be repaid 
retroactively.   

In any event, it may take several years for the outcome of litigation to be known. However, 
the legal and political implications of option 1, in particular the uncertainties it will create and 
their  negative  impact  on  the  effectiveness  of  the  EU’s  TDI,  are  likely  to  be  felt  almost 
immediately after December 2016.  

In particular, due to the uncertain legal environment, the EU industry might be discouraged to 
file complaints, or the effectiveness of the duties imposed could be undermined. In addition, it 
cannot be excluded that China would decide to target certain important economic interests of 
the EU, for instance by conducting AD and/or AS investigations on sensitive products, as they 
have done in the past e.g. with the initiation of an AD/AS investigation concerning wine, in 
response  to  the  EU’s  trade  defence  measures  imposed  on  solar  panels.  In  this  context,  it  is 
important to note that agricultural exports to China are on the rise. Although, they represent 
overall  a  relatively  small  share  of  around  6%  (in  2015),  of  total  EU  agricultural  exports31, 
many agricultural commodities are the first export item to China for certain Member States. 
Hardly any agricultural products originating in China are subject to TDI measures in the EU.  

In terms of economic and social impact of the baseline option, at the end of 2015, there were 
52 AD/AS measures in place on imports originating in China. About 250,000 direct jobs in 
EU industries benefit from these AD measures. The main industries affected by TDI in terms 
of  employment  are  ceramics,  iron  and  steel  and  other  mechanical  engineering.  The  main 
Member  States  affected  by  the  measures  are  Italy,  Germany,  Spain,  France,  Portugal  and 
Poland, which represent around 80% of total employment affected by AD/AS measures. 

While,  the  baseline  option,  in  the  short  term,  would  not  as  such  have  direct  impacts  on  the 
employment  and  output  of  the  products  currently  covered  by  measures,  the  continued 
application of the lesser duty rule is likely to have a  negative impact on the effectiveness of 
the measures in the future due to the distorted functioning of the Chinese economy.  

There  is  no  consensus  among  stakeholders  on  the  extent  of  the  legal  consequences  of  the 
expiry  of  certain  provisions  of  Section  15  (a)  (ii)  of  China’s  Protocol  of  Accession  to  the 
WTO on the remainder of that section. Some stakeholders (mainly importers, traders and law 
firms representing them) are of the view that the remaining subparagraph has no legal effect 
on its own, and thus it would be prudent to apply the standard methodology in cases involving 
China.  By  contrast,  the  vast  majority  of  stakeholders  consider  that  the  remaining 
subparagraph  does  not  contain  an  obligation  to  use  the  standard  methodology.  There  is  no 
consensus  among  the  latter,  whether  the  analogue  country  methodology  or  any  other 
methodology (except for the standard methodology) should be used.      

However,  many  stakeholders  have  insisted  that  whatever  option  is  taken  in  response  to  the 
expiry  of  certain  provisions  of  Section  15  of  China’s  Protocol  of  Accession  to  the WTO,  it 
needs to be legally sound. 

31 http://ec.europa.eu/agriculture/trade-analysis/monitoring-agri-food-trade/2015-12_en.pdf 

32 

 
 
 
 
 
 
 
 
 
 
 
 
                                                 
As regards the political dimension, most industry stakeholders are aware of the problem and 
favour  a  solution  that  avoids  a  deterioration  of  the  relationship  with  China,  but  at  the  same 
time ensures effective TDI. 

6.2. Impacts of Policy Option 2 

As  indicated  above,  this  option  would  entail  treating  China  as  any  other  WTO  market 
economy.  It  would  consist  in  the  automatic  recognition  that  China  operates  under  market 
economy  conditions.  Chinese  prices  and  costs  would  be  used,  unless  one  of  the  exceptions 
(identified in section 5.2.2) would apply.  

In the public consultation, many stakeholders considered that the expiry of certain provisions 
of  Section  15  of  China’s  WTO  Accession  Protocol  does  not  imply  any  automaticity  in 
changing the calculation methodology. They consider that the EU methodology should not be 
changed until China has fulfilled all the five criteria.  

An overwhelming majority of respondents considered that option 2 would result in fewer anti-
dumping investigations and have a negative effect on the effectiveness of the EU TDI system. 
Except  for  importers,  a  vast  majority  of  respondents  considered  using  the  standard 
methodology  would  have  a  negative  impact  on  businesses  and  citizens.  An  overwhelming 
majority  of  respondents  considered  that  this  option  would  be  very  detrimental  on  the 
employment situation in the EU. 

On the other hand, a number of categories of respondents to the public consultation, namely 
importers,  wholesalers,  retailers  and  downstream  users  are  in  favour  of  this  option.    They 
would pay lower prices for the imported product, which would be beneficial for their activity. 
Stakeholders concerned claim that, for example, the AD measures on solar panels have had a 
negative  impact  on  the  downstream  industry,  i.e.  the  installers  of  solar  panels.  Some 
stakeholders claim that in the stainless steel fasteners and in the satsumas cases, the dumping 
margins calculated were inflated because they were based on a normal value in an analogue 
country. 

However, in terms of effectiveness, option 2 would significantly weaken the TDI. Using the 
standard  methodology  would  result  in  lower  duty  levels  and  most  likely  also  in  fewer  AD 
investigations. In addition, the significant negative economic and social impact of option 2 
on  the  EU  industry,  as  described  below,  would  by  far  outweigh  any  gains  for  traders  and 
downstream users.  

To estimate the economic and social impact of option 2, DG Trade commissioned an external 
study,  which  assesses  the  possible  impact  on  employment  of  using  the  standard 
methodology in AD cases against China, as opposed to the current NME methodology (based 
on  an  analogue  country).  In  estimating  the  impact  of  this  option,  it  is  assumed  that  the 
standard  methodology  using  Chinese  prices  and  costs  fully  applies.  The  study  focuses  on 
employment  effects.  It  uses  econometric  analysis  on  the  basis  of  a  representative  sample  of 
recent AD investigations concerning China (please find more details regarding the calculation 
model used in annex 4).  

33 

 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
At the outset,  it should be noted that it is very difficult to estimate the possible effects of a 
change  in  methodology  on  the  results  of  future  AD  investigations.  Indeed,  dumping 
calculations are complex and are based on actual trade transactions or on a construction of a 
price on the basis of costs of production. Such data may vary across investigations and over 
time.  

As  mentioned  in  the  beginning  of  section  6,  to  estimate  the  effects  of  a  change  in 
methodology,  DG  Trade  recalculated  in  a  representative  sample  of  past  AD  cases,  the 
dumping margins that would have been achieved when using the standard methodology. Such 
recalculation  found  that  using  the  standard  methodology  in  AD  cases  against  China  would 
reduce the level of AD measures on average by 30 percentage points as compared to the NME 
methodology.32  As a result, based on the available empirical evidence, gross import prices of 
imported products from China that are currently subject to AD measures would on average be 
20 percent lower, if the duty were calculated using the standard methodology.   

It should be noted that this approach was exclusively based on Chinese prices or costs. It did 
not  take  into  the  account  the  possibility  to  use  alternative  data,  should  a  “particular  market 
situation” have been found. The lower AD duties on Chinese imports are estimated to result in 
lower prices of the imported Chinese products for EU users and consumers.  

Chinese  imports  of  the  products  concerned  by  AD  investigations  would  be  expected  to 
increase  between  18  and  28  percent  if  the  standard  methodology  were  used  and  would 
substitute  for  sales  of  the  EU  import-competing  industries  (and/or  imports  from  competing 
third countries). These would therefore suffer both, in terms of employment and in terms of 
output.  

The  analysis  was  based  on  a  step-by-step  approach.  It  first  examined  the  impact  of  lower 
tariffs  on  import  levels  for  the  products  concerned.  Then  it  examined  the  impact  of  these 
changing  import  levels  on  sectorial  employment  in  the  EU.  The  results  are  based  on  the 
observation  and  econometric  analysis  of  import  prices  and  quantities  from  China  and 
employment in the related sectors in the past.  

In  subsequent  steps,  the  disappearance  of  the  deterring  effect  of  the  current  NME 
methodology,  on  bilateral  imports  and  sectorial  employment,  was  assessed  in  the  short  and 
long term. Based on how sectors have been affected in the past by dumping in bilateral trade 
relations  other  than  EU-China,  probabilities  of  new  economic  sectors  being  subject  to 
dumping in the future were established.   

The  results  of  the  analysis  show  that  the  short  term  direct  effects  of  using  the  standard 
methodology,  on  EU  sectors  currently  affected  by  injurious  dumping  from  China,  could 
potentially  put  between  49,700  and  73,700  jobs  at  risk.  This  estimate  is  based  on  two 
important assumptions, (1) the same products as now are affected by TDI in the short term, 
(2) the share of Chinese imports affected by TDI is 2.5%, based on the historical average.  

32   This average reduction is a combination of lower AD duties in some cases (where  the investigation would 

still conclude Chinese firms are dumping) and elimination of AD duties altogether in other cases.  

34 

 
 
 
 
 
 
 
 
 
 
 
 
                                                 
In the long term, potential losses could be in the range of 117,800 to 175,600 jobs. These are 
potential job losses that might result from a weaker AD instrument, which may not be able to 
protect industries suffering from Chinese dumping. This is based on the assumption that, in 
the  future,  dumping  could  also  take  place  in  sectors  where  the  EU  has  currently  no  TD 
measures  in  force  against  imports  from  China.  The  corresponding  sectorial  distribution  is 
inferred on current third country (US) cases against China and current EU cases against other 
countries, which  seemed the  most  reliable approach.  While existing overcapacities in China 
and sectors identified in the five year plans, may give an indication of products that may be 
dumped  in  the  future,  there  are  many  other  factors  (such  as  evolution  of  regional  demand, 
consumption patterns or price of raw materials), that have to be taken into account and that 
may  lead  to  an  AD/AS  complaint.  Therefore,  industries’  behaviour  as  observed  by  AD/AS 
complaints  seems  more  indicative  as  a  basis  for  future  TD  action.    A  further  assumption  is 
that the long term share of Chinese imports affected by AD measures would be in the order of 
nearly 6%, which compares reasonably with a theoretical long term upper bound established 
in literature.   

In  a  final  step  the  consultants  investigated  indirect  effects  on  upstream  and  downstream 
sectors. Calculating upstream and downstream effects for the lower of their two estimates on 
long-run direct effects lead to an overall indirect effect of 8,500 to 26,200 potential job losses. 
Thus, the overall potential job losses would range between 126,300 and 201,800 in the long 
run.  

The following table summarizes the potential long-term effects on EU employment of using 
the standard methodology that the external study found:  

Table 1: Range of the number of jobs potentially put at risk in the EU as a result of a 
change  in  the  calculation  methodology  regarding  China  towards  the  standard  method, 
long-run 

Direct effects  

Lower bound 
-117,800 

Upper bound 
-175,600 

Indirect upstream effects 

-36,900 

Indirect downstream effects 

+28,400 

Total effect  

-126,300 

-  54,600 

+28,400 

-201,800 

Source:  Assessment  of  the  economic  impact  of  changing  the  methodology  for  calculating  normal  value  in  trade  defence 
investigations against China. 21 December 2015 

In an additional part of the study, the results are broken down by Member State (‘MS’) and by 
sector  to  detect  possible  concentrations  in  certain  industries  and  regions.  To  this  end,  again 

35 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
two  scenarios,  short-run  and  long-run,  are  run  using  two  alternative  sets  of  parameter 
estimates  which  sketch  a  lower  and  upper  bound.  The  results  are  fully  consistent  with  the 
aggregate analysis, i.e. adding up over MS or sectors will yield the overall results discussed 
above.  

Although  the  breakdown  calculations  have  been  performed  for  all  combinations,  this  report 
only presents and discusses those of the most far reaching scenario, i.e. the long-term upper 
bound. Although the effects in the different scenarios and under the different parameters are 
not proportional, the ranking of MS is not strongly affected over the scenarios.33  

Table  2  below  shows  the  breakdown  of  these  scenario  effects  by  MS.  Unsurprisingly,  the 
most strongly affected MS in terms of total job losses is Germany, it being the largest MS in 
terms  of  employment  in  general  and  industrial  employment  in  particular.  The  country  is 
simulated  to  be  affected  by  up  to  45.000  potential  job  losses,  42,000  of  which  would  be  in 
firms directly affected by Chinese dumping.  

In order to put the total effects into perspective the right hand column of Table 2 relates them 
to  overall  employment  in  the  MS.  Under  this  relative  view,  the  MS  most  strongly  affected 
would  be  the  Czech  Republic,  with  potential  jobs  at  risk  corresponding  to  0.15%  of  the 
country's  total  employment.  Other  MS  relatively  strongly  affected  are  Poland,  Romania, 
Slovenia  and  Slovakia  with  potential  jobs  at  risk  equivalent  to  0.12  –  0.14%  of  the  overall 
employment in these MS.  

33 Out of 27 MS investigated, 12 remain the exact same rank over all combinations of scenarios and parameters. 
Belgium changes ranks strongest, between being the 14th most strongly affected and the 18th most strongly 
affected,  i.e.  showing  a  span  over  four  ranks.  All  other  MS  have  a  span  of  three  or  less.  The  ranking  of 
sectors  is  somewhat  stronger  affected,  though.  The  data  is  based  on  the  WIOD  database,  which  was  a 
research project from 2009-2012. At that time it was decided to cover the 27 EU Member States and 13 other 
major economies in the world. Croatia joined the EU in 2013 and was thus not covered. 

36 

 
 
 
 
 
 
                                                 
 
Table 2: Upper-bound, long-run estimates of jobs potentially put at risk by EU MS as a 
result of a change in method towards the standard methodology 

Austria 
Belgium 
Bulgaria 
Cyprus 
Czech Rep. 
Germany 
Denmark 
Greece 
Spain 
Estonia 
Finland 
France 
United Kingdom 
Hungary 
Ireland 
Italy 
Lithuania 
Luxemburg 
Latvia 
Malta 
Netherlands 
Poland 
Portugal 
Romania 
Slovakia 
Slovenia 
Sweden 

Direct 
Effect 
-3 491 
-2 797 
-2 641 
-138 
-7 074 
-41 663 
-1 642 
-1 682 
-11 529 
-508 
-1 901 
-17 033 
-15 226 
-4 184 
-1 037 
-23 459 
-908 
-67 
-577 
-109 
-3 913 
-16 481 
-3 574 
-7 375 
-2 701 
-1 081 
-2 806 

Indirect upstream 
Effect 
-1 124 
-806 
-947 
-56 
-2 045 
-10 291 
-481 
-981 
-3 509 
-191 
-577 
-4 925 
-4 272 
-1 279 
-350 
-6 389 
-369 
-25 
-245 
-30 
-1 155 
-6 769 
-1 155 
-4 578 
-841 
-390 
-829 

Indirect 
downstream 
Effect 
582 
460 
372 
21 
1 236 
7 262 
261 
295 
1 738 
74 
283 
2 704 
2 352 
775 
174 
3 324 
114 
11 
72 
16 
568 
2 538 
471 
1 550 
497 
198 
460 

Total 
Source: Consultants' simulations, Eurostat [lfsi_grt_a], own calculations. 

-175 597 

-54 608 

28 407 

Total effect 
-4 033 
-3 143 
-3 215 
-173 
-7 883 
-44 692 
-1 862 
-2 368 
-13 299 
-625 
-2 195 
-19 254 
-17 146 
-4 689 
-1 214 
-26 523 
-1 163 
-81 
-751 
-123 
-4 500 
-20 712 
-4 258 
-10 403 
-3 044 
-1 273 
-3 175 

-201 797 

in %of total 
employment 

-0.09% 
-0.07% 
-0.09% 
-0.05% 
-0.15% 
-0.10% 
-0.07% 
-0.06% 
-0.07% 
-0.10% 
-0.09% 
-0.07% 
-0.06% 
-0.11% 
-0.06% 
-0.11% 
-0.09% 
-0.02% 
-0.09% 
-0.07% 
-0.05% 
-0.13% 
-0.09% 
-0.12% 
-0.14% 
-0.14% 
-0.07% 

-0.09% 

Results for Croatia, for which there are no individual data available in the World Input Output 
Database, could not be quantified in the analysis.  

Employment in the industrial sector, which may serve as a rough indicator of vulnerability is 
about 27% of total employment and is somewhat higher than the EU 28 average with about 
22%.  It  is  however  significantly  lower  than  industrial  employment  in  the  Czech  Republic 
(37%) where the above analysis found the strongest effects.  

Under  the  simplifying  assumption  of  a  linear  relationship  between  employment  in  the 
manufacturing sector and impacts in terms of jobs potentially at risk, about 1 700 persons or 
0.11% of total employment could be affected by option 2 in Croatia. 

37 

 
 
 
 
 
 
  
 
 
Table 3: Share of employment in the manufacturing sector in Croatia and selected EU 
MS, 1 000 persons and share of total, 2014. 

All Activities 

Share of 
Manufacturing 

226 604.5 

European Union (28 
countries) 
Czech Republic 
Croatia 
Poland 
Romania 
Slovenia 
Slovakia 
Source: Eurostat [lfsi_grt_a], own calculations. 

5 109.2 
1 575.0 
15 731.0 
8 637.8 
929.6 
2 223.2 

21.9 % 

36.8 % 
26.9 % 
30.2 % 
28.6 % 
29.3 % 
31.1 % 

Table 4 below shows a breakdown of the effects of the most far-reaching scenario by sector of 
the  WIOD34  classification.  The  most  strongly  affected  sector  would  be  the  "basic  and 
fabricated metals" sector, of which the steel sector forms an important part. This position, as 
the sector where jobs would be potentially most at risk is stable over all simulations. Potential 
jobs at risk would reach about 43.000, equivalent to about 3.7% of total employment in the 
sector  in  2015.35  The  second  and  third  most  affected  sectors  are  the  "manufacturing  nec" 
sectors  covering  manufacturing  activities  not  covered  in  the  other  rows  of  table  4  and  the 
"electrical  and  optical  machinery"  sectors  with  about  21,000  jobs  potentially  at  risk  in  each 
one of these sectors.  

Table 4 displays only the effect on tradable goods sectors. That does not mean that the non-
tradable  sectors  have  been  ignored  and  with  them  a  potential  source  for  significant 
employment effects. The negative upstream effect found for those was, however, by an order 
of magnitude smaller than those for even the least affected tradable sectors, which is why the 
non-tradable sector has eventually been excluded from the analysis. 

34 World Input Output Database: http://www.wiod.org/ 

35 Eurostat [lfsq_egan22d]. Note that reasonably precise sectorial mapping between WIOD (World Input-Output 
    Database)  and  the  NACE  classification  (Statistical  classification  of  economic  activities  in  the  European 
    Community) used by Eurostat is possible for this sector but not necessarily for all others. 

38 

 
 
 
 
 
  
 
 
 
 
                                                 
 
Table  4:  Upper-bound,  long-run  estimates  of  jobs  potentially  put  at  risk  by  WIOD 
sector as a result of a change in method towards the standard methodology 

Direct 
Effects 

Indirect 
upstream 
Effects 

Indirect 
downstream 
Effects 

Total effect 

1-5  Agriculture 

10-14  Mining 
15-16  Food products 
17-18  Textiles 

19  Leather & footwear 
20  Wood products 
21-22  Paper products 
23  Oil products 
24  Chemicals 
25  Rubber & plastics 
26  Non-metallic minerals 
27-28  Basic & fabricated metals 

29  Machinery 

30-33  Electrical & optical equip. 
34-35  Transport equipment 

36  Manufacturing NEC 

Total    

-1 591 
-402 
-16 073 
-2 375 
-1 934 
-7 653 
-7 111 
-1 163 
-11 866 
-12 725 
-12 387 
-35 912 
-21 178 
-10 282 
-14 570 
-18 374 

-11 566 
-2 360 
-2 246 
-768 
-274 
-2 381 
-1 739 
-205 
-2 751 
-2 953 
-1 920 
-14 179 
-2 842 
-2 118 
-2 692 
-3 616 

2 106 
47 
2 140 
243 
22 
137 
389 
73 
1 561 
549 
259 
7 279 
3 376 
3 591 
5 636 
999 

-11 051 
-2 716 
-16 179 
-2 900 
-2 186 
-9 898 
-8 460 
-1 295 
-13 056 
-15 129 
-14 048 
-42 811 
-20 644 
-8 809 
-11 626 
-20 991 

-175 597 

-54 608 

28 407 

-201 797 

Source: Consultants' simulations, Eurostat [lfsi_grt_a], own calculations. 

With  regards  to  the  wider  macro-economic  impacts,  no  sufficiently  meaningful  economic 
forecast is possible. First of all, there is considerable dispute in the economic literature as to 
the knock-on effects that any job lost would have on the wider economy. Secondly, the impact 
will vary widely across Member States and sectors, not only depending on their exposure to 
dumping, which has been discussed above, but also on the current macroeconomic climate of 
the Member State. 

Therefore, under the current circumstances, it is not possible to draw conclusions on the effect 
of  a  change  in  the  methodology  of  the  calculation  of  the  dumping  margin  on  GDP or  other 
main macro-economic multipliers. 

It is also noted that a study (Scott and Jiang, 2015)36 found employment effects amounting to 
between  1.7  and  3.5  million  job  losses.  The  study  is,  however,  based  on  the  underlying 
assumption  that  the  entirety  of  imported  goods  from  China  will  be  affected  by  dumping 
behaviour and would be entering the EU market at prices 30% below their current level. This 
assumption is not realistic and leads to an over-inflated effect on employment. 

36 http://www.epi.org/publication/eu-jobs-at-risk. 

39 

 
 
 
 
 
 
 
 
 
 
                                                 
 
6.3. Impacts of Policy Option 3 

Option 3 consists of three elements which aim at ensuring the continued effectiveness of the 
TDI and further strengthening them.   

The  first  element  of  option  3  is  a  new  calculation  methodology  that  would  allow  for 
alternative  approaches  in  order  to  effectively  deal  with  distortions,  as  a  replacement  of  the 
analogue  country  methodology.  Such  approach  would  also  remedy  any  limitations 
experienced with the analogue country methodology in certain cases, such as its rigidity. 

An additional element is transition periods, which would ensure the continued effectiveness of 
measures already in place, in the short and medium term. AD measures would be maintained 
at their current level and hence the current jobs preserved. Its impact essentially depends on 
the length of the transition period and/or the expiration of the measure.  

Finally, a third element would look at improving the effectiveness in dealing with  subsidies 
discovered in the course of AS investigations. 

The  economic  and  social  impact  of  option  3  was  assessed  on  the  basis  of  the  same 
methodology  as  for  option  2.  Hence,  the  starting  point  was  a  recalculation  of  the  dumping 
margins that would have been achieved, when using the alternative calculation methodology 
proposed under option 3 in a representative sample of past AD cases. 

The  recalculation  assumed  that in  all  circumstances  prices  or  costs in  the  exporting country 
could  not  be  used,  given  the  significant  distortions  present.  Such  recalculation  found  that 
using  this  alternative  methodology,  the  level  of  AD  measures  would,  on  average,  be  3.86 
percentage points lower as compared to the NME methodology i.e. 35% vs. 39% respectively.  

On the basis of this finding, the same four step approach as for the estimate of option 2 was 
followed.  The  results  are  shown  in  table  5  below.  As  a  consequence  of  a  much  smaller 
difference  in  AD  duties  compared  to  the  current  methodology  –  which  can  actually  be 
considered  as  almost  negligible  -  ,  the  associated  number  of  jobs  potentially  put  at  risk  is 
significantly  smaller. In the long run, the number of jobs which may potentially put at risk 
would be about 15,000 to 25,000.  

Table  5:  Range  of  the  number  of  jobs  potentially  put  at  risk  in  the  EU  as  a  result  of 
changing the calculation methodology regarding China, long-run (first element of option 
3) 

Lower bound 

Upper bound 

Direct effects  

Indirect upstream effects 

Indirect downstream effects 

Total effect  

-15,200 

-4,700 

+4,600 

-15,300 

-22,600 

-7,000 

+4,600 

-25,100 

Source:  Assessment  of  the  economic  impact  of  changing  the  methodology  for  calculating  normal  value  in  trade  defence 
investigations against China. 21 December 2015 

40 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table 6 below shows the breakdown of the results for the upper-bound by Member State. The 
order in which employment in the MS is affected in relative terms is almost identical to option 
2. 

Table 6: Upper-bound, long-run estimates of jobs potentially put at risk by EU MS as a 
result of a change in method towards a new methodology (first element of option 3) 

Austria 
Belgium 
Bulgaria 
Cyprus 
Czech Rep. 
Germany 
Denmark 
Greece 
Spain 
Estonia 
Finland 
France 
United Kingdom 
Hungary 
Ireland 
Italy 
Lithuania 
Luxemburg 
Latvia 
Malta 
Netherlands 
Poland 
Portugal 
Romania 
Slovakia 
Slovenia 
Sweden 
Total 
Source: Consultants' simulations, Eurostat [lfsi_grt_a], own calculations. 

Direct 
Effect 
- 449 
- 360 
- 340 
- 18 
- 911 
-5 362 
- 211 
- 217 
-1 484 
- 65 
- 245 
-2 192 
-1 960 
- 539 
- 134 
-3 019 
- 117 
- 9 
- 74 
- 14 
- 504 
-2 121 
- 460 
- 949 
- 348 
- 139 
- 361 
-22 601 

Indirect 
upstream 
Effect 
- 145 
- 104 
- 122 
- 7 
- 263 
-1 324 
- 62 
- 126 
- 452 
- 25 
- 74 
- 634 
- 550 
- 165 
- 45 
- 822 
- 48 
- 3 
- 32 
- 4 
- 149 
- 872 
- 149 
- 590 
- 108 
- 50 
- 107 
-7 031 

Indirect 
downstream 
Effect 
 94 
 74 
 60 
 3 
 199 
1 171 
 42 
 47 
 280 
 12 
 46 
 436 
 379 
 125 
 28 
 536 
 18 
 2 
 12 
 3 
 92 
 409 
 76 
 250 
 80 
 32 
 74 
4 579 

Total effect 
- 500 
- 390 
- 402 
- 22 
- 974 
-5 516 
- 231 
- 296 
-1 656 
- 78 
- 273 
-2 391 
-2 130 
- 578 
- 151 
-3 306 
- 146 
- 10 
- 94 
- 15 
- 561 
-2 584 
- 533 
-1 289 
- 376 
- 157 
- 394 
-25 052 

in % of total 
employment 
-0.01% 
-0.01% 
-0.01% 
-0.01% 
-0.02% 
-0.01% 
-0.01% 
-0.01% 
-0.01% 
-0.01% 
-0.01% 
-0.01% 
-0.01% 
-0.01% 
-0.01% 
-0.01% 
-0.01% 
0.00% 
-0.01% 
-0.01% 
-0.01% 
-0.02% 
-0.01% 
-0.01% 
-0.02% 
-0.02% 
-0.01% 
-0.01% 

A rough approximation of the results to Croatia yields about 200 jobs potentially at risk in the 
country under option 3.1, corresponding to about 0.01% of total employment. 

Regarding  the  second  element  of  option  3,  the  transition  periods,  their  impact  needs  to  be 
assessed  from  a  timing  point  of  view.  The  actual  impact  on  potential  jobs  at  stake  is  very 
difficult to quantify. Currently, there are around 50 AD/AS measures in place with regard to 
Chinese imports. Option 3 would ensure that these measures stay in force for the remainder of 
the  duration  initially  foreseen  and  at  the  duty  levels  initially  imposed.  Option  3  would  thus 
help avoiding that any change in the calculation methodology affects measures in place.  

Without this element a significant number of interim reviews may be requested by exporters 
concerned  after  December  2016  on  the  sole  grounds  that  the  new  calculation  methodology 
could yield a different mathematical result and therefore duty level.  Although, any economic 

41 

 
 
 
 
 
  
 
 
or  social  impact  is  difficult  to  quantify,  as  the  outcome  of  such  interim  reviews  is 
unpredictable,  the  industries/sectors  concerned  would  definitely  be  impacted  by  the 
uncertainty created in the market.   

The  complementary  importance  of  this  element  is  significant,  as  in  the  public  consultation 
stakeholders specified that 60% of their measures in force had an average remaining duration 
of 3 to 5 years and 32% an average remaining duration of 1 to 3 years.  

Regarding  the  third  element  of  option  3,  the  AS  element,  it  is  recalled  that  due  to  the 
complexity  and  opacity  of  the  Chinese  AS  schemes,  it  is  very  difficult  for  complainants  to 
identify the relevant schemes at complaints stage and thus AS investigations and  AS  duties 
are much less frequent than AD investigations and AD measures. Furthermore, for the same 
reasons, AS duty levels are typically much lower than AD duty levels.  

Therefore,  any  impact  of  this  element  is  expected  to  be  rather  small  and  impossible  to 
quantify.  AS  investigations  (as  AD  investigations)  are  complaint  driven  and  it  is  thus 
impossible to predict how many AS complaints will be lodged in the future. It is even more 
difficult  to  predict,  what  schemes  and  how  many  would  be  discovered  during  those 
investigations.  

Hence, even though the impact of the anti-subsidy element, when analysed in isolation maybe 
of little consequence, the importance of this element lies in its complementarity with the other 
elements of this option. In the public consultation a large majority of respondents considered 
that an AS investigation should cover all subsidies found in an ongoing investigation. 

However,  a  vast  majority  of  stakeholders  also  claimed,  on  the  basis  of  the  information 
available at the time of the public consultation, that the elements presented under option 3 are 
in their view insufficient to ensure the continued effectiveness of the EU’s TDI. In the public 
consultation  a  large  majority  of  stakeholders  considered  that  the  elements  presented  under 
option 3 would not be effective, neither in adequately tackling the distortions in China, nor, a 
fortiori,  in  reducing  any  negative  impact  of  a  change  in  the  calculation  methodology. 
However,  following  the  results  of  the  public  consultation  and  the  work  on  the  impact 
assessment, option 3 has evolved and has been strengthened in many respects. 

Some  stakeholders  referred  to  other  options  that  should  be  explored  such  as  a  sectorial 
approach or price baskets. While, the reports on the Chinese economy foreseen under option 3 
(section  5.2.3)  may  identify  different  levels  of  State  interference  or  distortions  in  various 
sectors, any amendment to the EU TDI legislation would apply horizontally to all sectors and 
industries.  Thus  the  continued  effectiveness  of  the  TDI  is  ensured,  as  it  is  impossible  to 
predict in which sectors AD/AS complaints maybe lodged in the future. This approach is also 
in line with the WTO principle of non-discrimination.  

In cases where significant distortions are found, option 3 would allow for the full adjustment 
of costs on the basis of costs in a third country or international benchmarks.  

Many stakeholders are also sceptical as to how to deal in practice with distortions (other than 
by applying the analogue country methodology) and as to the feasibility of the AS element, 
given  the  opacity  of  Chinese  subsidy  schemes  and  lack  of  cooperation.  Therefore,  many 
42 

 
 
 
 
 
 
 
 
 
 
 
 
 
stakeholders  insisted  that  any  alternative  calculation  methodology  must  provide  for  the 
possibility of not using Chinese prices and costs as a basis.  

In  this  context  it  is  highlighted,  that  of  the  various  individual  elements  of  option  3,  each 
address  different specific  problems  of  an  alternative calculation  methodology,  and  each  one 
contributes its share to the overall effectiveness of the TDI. Thus, the effectiveness of option 3 
needs to be assessed on the basis of all elements of this option in combination. 

Therefore, any potential negative effects on jobs of option 3 should normally be limited, given 
the fact that the AD duties calculated under option 3 are roughly  at the same level as  those 
reached  under  the  current  methodology.  Whereas,  it  has  been  demonstrated  that  lower  anti-
dumping duties (option 2) may put a significant number of jobs at risk. 

On this  basis, it should be concluded that option 3, i.e. a change  in methodology, transition 
periods and strengthened anti-subsidy provisions, should normally have a neutral effect on 
jobs, i.e. maintain the existing employment levels 

7.  COMPARISON OF POLICY OPTIONS 

7.1. How do policy options compare? 

In  light  of  the  findings  of  the  impact  assessment  process,  the  policy  options  have  been 
compared  in  order  to  evaluate,  which  option  best  contributes  to  address  the  problems 
identified and best meets the objectives set out.  The various options have been compared in 
terms  of  their  effectiveness,  efficiency  and  coherence  with  overarching  policy  objectives, 
while taking into account any positive and negative impacts.  

Policy option 1 

Policy option 1 is the “no change” option, meaning that the current system would remain in 
place.  It would partially meet the general objectives and also partially the specific objectives 
except for S1. The impact on effectiveness and the economic and social impact of the option 
itself would not be so significant. However, even though, option 1 is the no change option, the 
legal  environment  will  definitely  change  (Section  15  (a)  (ii)  included  in  the  Protocol  of 
Accession  of  China  will  expire  in  December  2016).  Due  to  this  “outside”  change,  the  legal 
and  political  implications  are  likely  to  be  considerable.  As  a  consequence,  there  may  be 
economic  implications  too  (e.g.  from  measures  taken  by  China),  which  are  impossible  to 
predict, let alone quantify at this stage.  

Therefore,  policy  option  1  cannot  be  considered  as  a  “classic”  baseline  option.  No  change, 
would  in  this  case  not  mean  status  quo,  but  a  likely  deterioration  of  the  situation  in  many 
respects.  This  is  reflected  in  the  rating  in  the  table  below  as  “-“  (and  not  0,  as  is  more 
commonly used for the base line option).   

43 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Policy option 2 

Policy option 2 would contribute to free trade, but at conditions less fair than today (G1). It 
would not increase EU competitiveness, but put a significant number of jobs in the EU at risk 
(G2).  It  would  deal  with  the  expiry  of  certain  provisions  of  Section  15  (S1)  and  not 
compromise  the  relationship  with  China  (S5).  However,  it  would  fare  very  negatively  with 
regard to S2, S3 and S4, as it would not provide an effective response to the many distortions 
in China (or other NME countries), resulting in insufficient duty levels to offset injury, and 
thus weaken the EU’s TDI.  

In  terms  of  overall  efficiency,  option  2  would  mean  in-effective  results  in  many  TD 
investigations, with the same resources employed and very little coherence with overarching 
EU policy objectives.       

Policy option 3 

Policy  option  3  (all  three  elements  combined)  would  meet  the  general  objectives  and  also 
provide significant contributions to the specific objectives.   

It  would  contribute  significantly  to  promoting  free  and  fair  trade  (G1)  and  to  increasing 
competitiveness  and creating/preserving  jobs in the EU (G2).  It would adequately deal with 
the expiry of certain provisions of Section 15 (S1) and appropriately take into consideration 
the relationship with China (S5). It would also ensure the continued effectiveness of the EU’s 
TDI  (S2).  The  new  calculation  methodology  would  provide  effective  response  to  the  many 
distortions  in  China  (S3)  and  thus  be  able  to  adequately  offset  injury  caused  by  dumped 
(subsidised imports) (S4).  The economic and social impact is estimated to be neutral overall 
as explained in Tables 5-8. 

In terms of effectiveness of the TD measures imposed, policy option 3 would achieve similar 
results as the current system in place  

7.2. Preferred Option  

In  summary,  option  3  (the  three  elements  combined)  appears  best  placed  in  adequately 
addressing the problems identified and meeting the objectives set out.  

As compared to the baseline option, it ensures that the expiry of certain provisions of Section 
15 of China’s Accession Protocol to the WTO is adequately dealt with, while at the same time 
ensuring the continued effectiveness of the EU’s TDI and also further strengthening them. Its 
social and economic impacts are considered neutral.  

In  terms of  overall efficiency, option 3 is  by far the best  placed of the three  options, as  the 
baseline option would certainly suffer significantly from legal uncertainty and/or legal action, 
which will be unlikely with option 3. The resources employed would be comparable to those 
of the current system. In case of a positive outcome of the modernisation the EU’s TDI would 
be  further  improved  (more  effective  TDI  measures  with  the  same  resources  employed). 
44 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Furthermore,  option  3  contributes  significantly  to  the  overarching  EU  policy  objectives,  in 
particular  it  contributes  to  preserving  jobs  in  the  EU  and  to  helping  EU  industry  to  remain 
competitive. 

In the table below the various options are rated according to how they meet the objectives and 
compare to the baseline option. The baseline option is rated “-“, because it is not a classic no 
change option (as explained above).  “- -“ means that the score is worse than that of the base 
line option. Positive scores range from + to +++, the latter being the best score. 

CRITERIA 

Option 1 

Option 2 

Option 3 

General objectives 

Promote free and fair trade (G1) 

Increase EU competiveness and create/preserve EU 
employment (G2) 

Specific objectives 

Deal adequately with the expiry of certain provisions 
of Section 15, and taking into account other countries 
in a similar situation (S1) 
Ensure  continued  effectiveness  of  the  EU’s  trade 
defence instruments (S2) 
Provide  effective  response  to  the  many  distortions  in 
the Chinese economy and in other NME countries (S3) 
Ensure  adequate  remedy  to  offset  injury  caused  by 
dumped/subsidised imports (S4) 
Maintain strong ties with our trading partners including 
China, based on mutual interests (S5) 

Overall effectiveness 

Efficiency  (time  and  resources  spent  in  relation  to 
estimated effectiveness)* 

Coherence with overarching EU policy objectives 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

* Please see more details regarding overall effectiveness in annex 3. 

+ 

+ 

-- 

+ 

+ 

-- 

-- 

-- 

++ 

+ 

-- 

-- 

++ 

++ 

++ 

+++ 

++ 

+++ 

++ 

++ 

+++ 

+++ 

++ 

+++ 

8.  MONITORING AND EVALUATION: How would actual impacts be monitored and 

evaluated? 

45 

 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The effectiveness of the changes introduced to the current EU’s TDI by this initiative should 
be subject to monitoring and evaluation.  

8.1. Monitoring 

The table below gives an overview of the objectives tackled and a set of indicators to monitor 
the  effectiveness  of  the  proposed  changes.  They  may  be  supplemented  by  other  indicators 
found suitable for monitoring the changes introduced.     

Objectives 

Indicators 

Ensure continued effectiveness 
of TDI 

Provide effective response to the 
many distortions in the Chinese 
and other NME countries 
Ensure adequate remedy to 
offset injury caused by 
dumped/subsidised imports 
Maintain strong ties with our 
trading partners including China 
based on mutual interests 
Operational objectives 
relating to preferred option 3: 

Developing a new methodology 
that adequately reflects the 
actual magnitude of dumping 

Establish transition periods   

Amending AS provisions 

- number of investigations initiated 
- number of measures imposed 
-number of investigations initiated 
against China 
- number of measures imposed against 
China  
-analysis of trade flows before and after 
entry into force 
- existence of distortions 
- evolution of the regulatory 
environment in China  
- number of expiry reviews initiated 
- number of interim reviews initiated 
(by EU industry) 

Sources of 
information 

DG TRADE, 
EUROSTAT 

DG TRADE 

DG TRADE 

- development of trade flows 
-  development of investment flows 

DG TRADE, 
EUROSTAT 

- average level of duties imposed  
- number of duties imposed at the level 
of the dumping margin 
- number of duties imposed at the level 
of the injury margin  
- number of interim review requests (by 
exporting producers) related to the 
change in methodology received 
/refused 
- number of AS investigations initiated 
- number of AS measures imposed 
- level of AS duties imposed 

DG TRADE 

DG TRADE 

DG TRADE 

46 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8.2. Evaluation 

The Commission should undertake an intermediate evaluation of its new initiative five years 
after  its  entry  into  force.  This  evaluation  should  assess  the  actual  economic,  social,  and 
environmental impacts and evaluate its efficiency and effectiveness, and  the extent to which 
its results are consistent with the objectives.  The evaluation results will be used for decision-
making  needs  on  the  future  policy,  and  for  amendments  to  the  regulatory  framework,  if 
appropriate.  The  Commission  will  communicate  the  evaluation  results  to  the  European 
Parliament and the Council.  

47 

 
 
 
 
 
 
 
 
 
 
Annex 1 

PROCEDURAL INFORMATION 

DG Chef de file: SecGen/ DG TRADE 
Agenda planning/work program reference: 2016/TRADE/002 

Organisation and timing:  

The first meeting of the inter service steering group (ISG) took place on 4 February 2016.  
The  following  DGs  participate  in  the  ISG:  TRADE,  AGRI,  SJ,  BUDG,  COMP,  ECFINF, 
EMPL, ENER, ENV, GROW, OLAF, TAXUD, EEAS, JUST. 

In  the  first  meeting  the  inception  impact  assessment  (IIA),  the  questionnaire  for  the  public 
consultation  and  the  consultation  strategy  were  finalised.  The  IIA  was  published  on  10 
February 2016 and the public consultation (PC) was launched on the same day. The PC was 
on line for ten weeks until 20 April 2016. 

In total, three meetings of the ISG were held.  

The meeting with the Regulatory Scrutiny Board (RSB) was held on 8 June 2016 (reference 
number: 2015/TRADE/027. The main comments received from the board (as indicated in the 
table below) were assessed and the IAR modified accordingly. 

RSBs recommendations 
(B) 
1.  Better  explain  context  and  clarify  link  to 
TDI modernisation and Steel Communication 

Modifications of the IAR 

reflected on pages 4, 5, 6,7 
and 22 

2. Explain the scope with regard to China and 
other countries 
3. Better explain options 
4. Qualify external study 
5. Better explain comparison of options 

(C) 
1.  Explain  context  and  clarify  link  to  TDI 
modernisation,  
Steel communication, EU strategy on China 

2. Clarify the scope of the initiative 

reflected on pages 5 and footnote 5 

reflected on pages 24,25, 
text added on pages 27, 28 
Text added on pages 45, 46 and table on page 
46 

text was added and modified on pages 4, 5, 
6,7  

page 22, 23 
explanation added  on page  5 and footnote 5, 
page 7 

48 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
3. Better explain the options,  

Text was added on pages 24, 25 

Clarify the issue of the LDR,  

the LDR was better explained on page 7 and 
its impact analysed in annex 7. 

merge sub-options 
4. Improve analysis of impact 

sub-options 3.1 and 3.2 were merged 
section added page 27, 28 

Explain methodology of other countries 

5. Clearer comparison of the options 

explanation added on pages 12 and 13 and in 
annex 6 
text  was  added  on  pages  45  and  46,  the 
methodology  and  scoring  better  explained  in 
table on page 46  

(D) 
Better explain the link to WTO rules 

added in Introduction on page 4 

Problem tree 

Evaluation indicators 

Indicators regarding option 3 

the  problem  tree  was  simplified  and  certain 
headings clarified, page 16 

indicators  were  revised  as  appropriate,  table 
page 47 and 48 

operational  objectives  and  corresponding 
indicators were added in table on page 49 

information  regarding  stakeholders’ 

More 
views. 

regarding 
information 
additional 
stakeholders’  views  was  added  on  pages  10, 
31, 34, 43, 44   

Evidence and sources of information: 

As a starting point, information and experience of DG TRADE in trade defence matters was 
used in order to identify the problems, set the objectives and define the various options. This 
can  be information  that has  been collected in  the framework of trade  defence investigations 
and/or  received  from  stakeholders.  Information  and  data  from  other  DGs  such  as  AGRI  or 
GROW  have  also  been  used.  Statistical  data  from  Commissions  internal  data  bases,  from 
EUROSTAT,  Eurostat  Structural  Business  Statistics,  COMEXT,  UNSTATS,WIOD  and 
NACE have also been consulted. 

Furthermore,  an  important  additional  source  of  information  provided  the  stakeholder 
consultation (annex 2). 

As regards the economic and social impacts, an external study has been commissioned by the 
Commission (annex 8). 

49 

 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
50 

 
 
 
 
 
 
 
 
 
Annex 2 

Results of the open public consultation regarding the possible change in the 
methodology 
trade  defence 
in 
investigations concerning the Peoples’ Republic of China37 

to  establish  dumping/subsidisation 

I. Introduction 
In the framework of the present Impact Assessment, the Commission consulted stakeholders 
in line with the consultation strategy published together with the Inception Impact Assessment 
(http://trade.ec.europa.eu/doclib/docs/2016/february/tradoc_154259.pdf).  

More specifically, stakeholders were consulted as follows: 

-   by  means  of  an  online  consultation,  open  from  12 February  to  20 April 2016  and  in 

- 

which any person/entity could participate; 
.in a stakeholder conference organized on 17 March 2016, to which approximately 300 
participants attended; 

-   in  a  consultation  meeting  with  social  partners  on  15 April 2016,  i.e.  with  the 
representatives of Trade Unions and Employers' associations which are members of the 
European Social Dialogue). 

II. Stakeholder conference 
The report of the Stakeholder conference is attached as Annex 2.1. 

III. Consultation meeting with social partners 
The report of the Consultation meeting is attached as Annex 2.2. 

IV. Online consultation 
The  online  consultation  was  based  on  a  questionnaire  published  on  the  EUSurvey  platform 
(https://ec.europa.eu/eusurvey/home/welcome).  

In  addition  to  replying  to  the  online  questionnaire,  a  number  of  stakeholders  provided  the 
Commission  with  additional  submissions,  directly  or  indirectly  related  to  the  online 
consultations.  These  submissions  also  fed  into  the  Impact  Assessment  process  and  are 
reflected below.   

The following categories of submissions can be distinguished: 

-  replies to the online questionnaire: in total, 5273 responses were submitted, 
-  e-mails and letters expressing concerns about certain aspects of the online consultation: 
in  total,  116  such  submissions  were  registered38;  to  a  significant  number  of  such 

37 This issue arises also in relation to other countries in a similar situation 

51 

 
 
 
 
 
 
 
 
                                                 
submissions  the  online  questionnaire  was  attached  in  a  format  where  the  respective 
respondents added their comments to the questions contained in the questionnaire, 

-  e-mails and letters commenting on various substantive aspects of a possible change of 
methodology  to  establish  dumping/subsidisation  in  trade  defence  investigations 
concerning China. In total, 48 such submissions were registered39, 

-  position  papers  (a  number  of  stakeholders  submitted  more  elaborate  comments  on 
various substantive aspects of a possible change of methodology; even though a number 
of such papers was submitted well before the beginning of the public consultation, the 
Commission  takes  the  views  expressed  in  these  submissions  into  account.  In  total,  19 
submissions of this type were registered. 

IV.1 Replies to the online questionnaire 
As  for  the  replies  to  the  online  questionnaire,  it  should  be  noted  that  a  number  of  entities 
provided more than one reply. More specifically, the following entities, all of which indicated 
production  of  steel  products  as  their  main  area  of  activity,  submitted  each  more  than  100 
replies:  

Celsa Huta Ostrowiec 
Compañía Española de Laminación S.L. 
CELSA STEEL UK LTD 
Nervacero 
BRC Ltd 
Total: 
The following entities, all of which indicated production of steel products as their main area 
of activity, submitted each between 50 and 99 replies: 

954 
427 
353 
162 
120 
2016 

Rom Group Ltd 
GLOBAL STEEL WIRE SA (GRUPO CELSA) 
Express Reinforcements Ltd 
Global Steel Special Products S.A.U (Celsa Group) 
Global steel Wire 
BRC Newport 
Total: 

75 
72 
65 
63 
58 
53 
386 

Approximately  200  additional  respondents  provided  between  2  and  49  replies  on  behalf  of 
their respective entities. 

In  view  of  the  above,  it  is  pointed  out  that  among  the  5273  replies  received,  some  3960 
(approximately  75%)  were  not  unique  but  were  delivered  together  with  one  or  more  – 
typically identical – replies submitted on behalf of the same legal entity. The following types 
of stakeholders participated in the online consultation: 

38 Another 4 submissions were delivered after the end of the public consultation 
39 Another submission was delivered after the end of the public consultation 

52 

 
 
 
 
 
  
 
 
 
 
 
 
                                                                                                                                                         
The  EU  producers  and  their  trade  associations  therefore  represent  88,5%  of  all  replies 
(including  the  abovementioned  duplications).  The  user  of  manufactured  products  or  raw 
materials  submitted  4,36%  of  all  replies,  followed  by  non-EU  producers  with  2,39%  of 
replies40. The number of replies submitted by other types of stakeholders remained below 1% 
of the total sum of replies. 

The respondents indicated the following as their main areas of activity41: 
Production of steel products 
Production of metal products 
Production of motor vehicles, trailers and semi-trailers or other transport equipment 
Production of ceramic products 
Wholesale, retail trade 
Production of chemicals and chemical products 
Other manufacturing 
Other service activities 
Other 
Total:  

4497   85,28% 
3,96% 
209  
3% 
158  
2,22% 
117  
1,73% 
91  
1,65% 
87  
1,59% 
84  
1,56% 
82  
9,52% 
502  
5827  110,51% 

Among respondents which indicated to be a company, the participation to the consultation in 
terms of size of undertakings is as follows42: 

40 1,2% of replies were submitted by producers from China, 1% by producers from EFTA countries, replies from 
other countries counted for less than 1% of the replies. 
41 Since respondents could indicate more than one area of activity in the online questionnaire, the results add to 
more than 100%.  
42 Corrected for duplications, the result would be 519 large company respondents, 270 medium ones, 165 small 
companies and 49 micro-companies 

53 

 
 
 
 
 
 
 
                                                 
Large company (more than 250 employees) 
Medium company (between 50 and 250 employees) 
Small company (between 10 and 50 employees) 
Micro company (less than 10 employees) 
Total companies: 
Not applicable / no answer 

3526 
1099 
167 
53 
4845 
428 

A very large majority of respondents (89,9%) indicated that they have previously participated  
in an EU trade defence procedure43 and virtually all respondents (97,5%) confirm that they are 
familiar with the provisions of Section 15 of China's protocol of accession to the WTO.  

IV.1.1. Application of the “standard dumping methodology” (option 2) 
Virtually  all  respondents  (98,8%)  confirmed  that  they  are  aware  that  a  change  in  the  EU 
legislation may result in applying the "standard dumping methodology" for the calculation of 
dumping margins and no longer the analogue country methodology. 

(95,3% of respondents takes the view that using the "standard dumping methodology would 
result in fewer anti-dumping investigations. The breakdown among respondents is as follows:  
98%  of  EU  producers  and  their  associations,  50%  of  importers  to  the  EU  and  their 
associations,  60%  of  non-EU  producers,  96%  of  users  of  manufactured  products,  82%  of 
citizens, 84% of other respondents.  

Similarly, almost all respondents (96,5% in total; 99% of EU producers and their associations, 
50% of importers to the EU and their associations, 61% of non-EU producers, 97% of users of 
manufactured  products,  90%  of  citizens,  61%  of  other  respondents)  consider  that  using  the 
"standard  dumping  methodology"  would  have  impact  on  the  effectiveness  of  EU'  trade 
defence instrument. 

Among  respondents  replying  on  behalf  of  a  business  enterprise,  a  large  majority  considers 
that the use of the "standard dumping methodology" would have a negative impact on  their 
activity (95% in total; 98% of EU producers and their associations, 53% of importers to the 
EU and their associations, 60% of non-EU producers, 96% of users of manufactured products, 
75% of citizens, 58% of other respondents).  

Similarly, 94% of all respondents consider that such change in methodology would put jobs at 
risk (97% of EU producers and their associations, 59% of non-EU producers, 95% of users of 
manufactured products, 72% of citizens and 80% of other respondents).  

43 91,1% of all respondents confirm that currently more than one product which they produce or trade is subject 
to anti-dumping measures. For one product, this is the case for 93,3% respondents. The level of duty in place is 
between 10 and 30% for the vast majority of respondents (84,6%) and it was calculated on the basis of injury 
margin  in  most  cases  (83,5%).  The  majority  of  respondents  (58,2%)  indicated  that  the  measures  currently  in 
place  are  partially  effective  in  eliminating  the  injury  they  suffered,  30,9%  consider  the  measures  from  which 
they currently benefit as effective in eliminating the injury.  

54 

 
 
 
 
 
 
                                                 
However,  among  importers  to  the  EU  and  their  associations  38%  take  the  view  that  such 
change would put jobs as risk whereas 36% consider jobs could be created44. Extending the 
question on the job situation in the entire EU, 94,2% of all respondents45 consider a possible 
change to using the "standard dumping methodology" as very detrimental. However, while an 
overwhelming  majority  (97%)  of  EU  producers  and  their  associations  see  such  change  as 
potentially  very  detrimental,  46%  of  importers  to  the  EU  and  their  association  assess  such 
change  as  beneficial,  with  41%  of  importers  considering  the  change  detrimental  to  the  job 
situation in Europe. 

In order to get a better understanding of the stakeholders' view with respect to option 2, the 
Commission  further  enquired  about  the  perceived  effects  of  using  the  "standard  dumping 
methodology"  
-  on  business  in  Europe:  this  option  would  be  very  detrimental  according  to  94,2%  of  all 
respondents, 97% of EU producers and their associations, 57% of non-EU producers, 94% 
of users of manufactured products, 78% of citizens and 56% of other respondents. On the 
other hand, 57% of EU importers and their associations consider the effect beneficial with 
42% seeing it as detrimental;  

-  on  industrial  users  and  consumers  in  the  EU  of  products  potentially  subject  to  anti-
dumping  measures:  this  option  would  be  very  detrimental  according  to  93%  of  all 
respondents, 96% of EU producers and their associations, 56% of non-EU producers, 95% 
of  users  of  manufactured  products,  73%  of  citizens;  on  the  other  hand,  55%  of  EU 
importers  and  their  associations  consider  the  effect  beneficial  with  38%  seeing  it  as 
detrimental,  among  other  respondents,  52%  see  the  effect  as  detrimental  and  41%  as 
beneficial); 

-  on the EU economy as a whole. This would be very detrimental according to 93,4% of all 
respondents, 97% of EU producers and their associations, 56% of non-EU producers, 94% 
of users of manufactured products, 80% of citizens and 60% of other respondents; on the 
other hand, 50% of EU importers and their associations consider the effect beneficial with 
42% seeing it as detrimental); 
  on the environment. This option would be negative according to 95,6% of all respondents, 
98% of EU producers and their associations, 59% of non-EU producers, 96% of users of 
manufactured  products,  90%  of  citizens  and  57%  of  other  respondents;  among  EU 
importers  and  their  associations,  the  largest  portion  of  43%  does  not  know  whether  the 
effects would be positive or negative); 

- 

-  on  investment  decisions  by  the  respective  respondent:  this  option  would  have  a  negative 
effect  according  to  95%  of  all  respondents,  98%  of  EU  producers  and  their  associations, 
58% of non-EU producers, 96% of users of manufactured products; among EU importers 
and their associations, 50% consider such effect as positive and 41% as negative; 

-  on effects on SME's: the impact of this option would be negative according to 95% of all 
respondents, 98% of EU producers and their associations, 60% of non-EU producers, 97% 

44  Similar  replies  were  submitted  when  expanding  the  question  on  the  respective  sector  in  which  the  relevant 
undertaking is active (96% respondents consider jobs would be put at risk in their sector; only among importers 
to the EU and their associations, 40% are of the opinion that such change in methodology could create jobs in the 
sector whereas 43% see jobs potentially put at risk) 
45 58% of non-EU producers, 96% of users of manufactured products, 82% of citizens and 57% of other 
respondents consider the change as potentially very detrimental. 

55 

 
 
 
 
 
                                                 
of users of manufactured products, 87% of citizens and 60% of other respondents; among 
EU importers and their associations, 50% consider the effect as potentially positive, with 
45% seeing it as negative). 

-  Finally, a clear majority of respondents considered that SME's would be affected more than 
large  companies  by  such  change  in  methodology.  This  view  was  held  by  71,1%  of  all 
respondents46, 71% of EU producers and their associations, 72% of EU importers and their 
associations, 56% of non-EU producers, 96% of users of manufactured products, 77% of 
citizens and 55% of other respondents). 

IV.1.2 Alternative methods to calculate dumping – option 3 
With regard to the possibility to “grandfather” existing measures (option 3.1.), 93,5% of the 
respondents considers that exempting existing measures from the application of the "standard 
dumping  methodology"  would  not  be  effective  in  lessening  its  negative  impact  on  the  EU 
economy, on the job situation in the EU, as well as on users and consumers. 

46 With 26,5% of respondents taking the view the effect would be equal for SME's and larger companies. 

56 

 
 
 
 
 
 
                                                 
With  regard  to  the  strengthening  of  the  existing  rules,  95,6%  supported  this  idea,  which  is 
based on the possibility to reject  costs or prices in case of significant distortions. 

However,  at  the  same  time,  a  vast  majority  of  respondents  (88,3%)  takes  the  position  that 
strengthening of existing rules or introducing new rules would not allow the EU to effectively 
deal with distortions in anti-dumping investigations and dumping margin calculations. In that 
respect, 92,8% of respondents submit that strengthening of existing rules or introducing new 
rules  would  not  be  effective  in  reducing  any  negative  impact  resulting  from  significant 
distortions  of  costs/prices  in  the  exporting  market  on  the  on  the  EU  economy,  on  the  job 
situation in the EU, as well as on users and consumers. 

Concerning  the  application  of  the  lesser  duty  rule,  an  issue  falling  in  the  remit  of  the  TDI 
modernisation  proposal,  95,3%  of  respondents    express  the  view  that  the  lesser  duty  rule 
should  no  longer  be  applied  in  anti-dumping/anti-subsidy  investigations  where  there  are 
significant  cost/price  distortions  in  the  exporting  country.  At  the  same  time,  94%  of  the 
respondents submits that the non-application of the lesser duty rule in situations of significant 
distortions of costs/prices in the exporting market would not be an effective way of reducing 
any negative impact on the on the EU economy, on the job situation in the EU, as well as on 
users and consumers. 

57 

 
 
 
 
 
 
 
Finally, 95,4% of all respondents takes the position that anti-subsidy investigation should in 
future cover all subsidies found in the course of an ongoing investigation. However, 60% of 
respondents consider that inclusion of subsidy schemes found in the course of an investigation 
would not reduce the negative effects of a possible change of methodology in a parallel anti-
dumping investigation. At the same time, 35,5% consider that such inclusion would partially 
help to reduce the negative effect. 

IV.2.  E-mails  and  letters  expressing  concerns  about  certain  aspects  of  the  online 
consultation 
A number of stakeholders submitted their position by means of an identical template e-mail, 
enclosing  the  reply  to  the  on-line  questionnaire  and  additional  comments.  There  were  116 
such documents.  

In these  replies, stakeholders took a negative stance with regard to a possible change in the 
methodology of dumping calculation towards the application of the “standard methodology”, 
emphasising the high stakes for the respective industries as well as expressing concerns that 
the  EU's  anti-dumping  system  would  be  rendered  ineffective  by  such  a  change  of 
methodology. In turn, this would result in a negative impact on EU jobs, growth, investments, 
innovations and SMEs.  

58 

 
 
 
 
 
 
 
The  stakeholders  also  expressed  criticism  with  regard  to  the  public  consultation.  They 
objected  to  the  fact  that  the  online  questionnaire  only  contains  closed-end  questions.  They 
alleged that the baseline option – is presented in the questionnaire in a way that it leads to its 
rejection  upfront.  They  also  objected  to  the  fact  that  there  are  only  three  options  for 
consideration  in  the  questionnaire  and  that  stakeholders  cannot  comment  on  the  results  and 
underlying  methodology  of  the  economic  study  which  is  being  carried  out  by  independent 
economic  experts.  In  view  of  the  above  alleged  shortcomings  of  the  online  consultation,  a 
number  of  stakeholders  chose  to  include  additional  comments  in  their  questionnaire 
submissions to illustrate their points of view. 

These  additional  comments  noted  amongst  others  that  unfair  trade  practices  could  result  in 
China  gaining  a  dominant  position  in  the  EU,  increasing  EU  dependency  on  imports  and 
worsening  the  trade  balance  with  China.  This  would  create  product  shortages  and  a 
consequent lack of competitive choice for EU consumers and fewer alternative sources for EU 
importers.  There  would  also  be  price  increases  for  consumers.  They  also  put  forward  that 
there would be a risk of losing know-how, erosion of research and innovation and a decline in 
quality products available on the market, whilst prices would rise. Furthermore, a continuation 
in the outsourcing of production of goods outside the EU could threaten the compliance with 
EU  standards  on  quality,  safety,  labour  rights,  intellectual  property  rights,  as  well  as  with 
specific legislation such as the REACH framework. 

It was also noted that the significant imports from China would contribute to climate change, 
as  more  goods  would  be  shipped  from  China  to  the  EU,  increasing  CO2  output.  The 
increasing imports would thus increase carbon footprint. Chinese environmental legislation is 
not  yet  as  strict  as  in  the  EU,  causing  further  damage  to  the  environment.  Finally,  fewer 
investments would be made by the EU industry as that there would be no longer any sufficient 
protection from unfair competition, and SMEs would find it even harder to make use of the 
EU's  trade  defence  system.  SMEs  are  not  well-equipped  with  resources  to  face  unfair  trade 
and many would be forced to shut down in the face of increased unfair trade. 

The stakeholders further submit that the "standard methodology" would be disastrous for the 
effectiveness  of  the  trade  defence  system.  In  their  view,  the  anti-dumping  instrument  is  the 
only  efficient trade  defence tool that is  readily available. The anti-subsidy instrument is  not 
viable  given  the  lack  of  transparency  on  the  Chinese  side.  Moreover,  the  anti-subsidy 
instrument is already hard to access for SMEs and they will be even less likely to make use of 
the trade defence instrument if the methodology was to be changed.    

IV.3. E-mails and letters commenting on various substantive aspects 

A  number  of  stakeholders  chose  to  present  their  views  on  specific  aspects  of  the  issue  by 
submitting  additional  e-mails  and  letters  going  beyond  the  structure  of  the  online 
questionnaire. There were 48 such documents. 

59 

 
 
 
 
 
 
Among these stakeholders, 12 expressed themselves in favour of changing the methodology. 
They took the view that new jobs would be created in the EU and that the change would have 
a  beneficial  effect  on  SME's  and  the  EU  industry  in  general.  Others  submitted  that  it  was 
important to avoid a strain in trade relations with China and that, consequently, the change in 
methodology would be the right course of action. One submission noted that the situation in 
each  sector  needs  to  be  assessed  on  its  own  merit  rather  than  on  a  country-wide  basis  and 
noted that a change in methodology on a sectorial basis could achieve this. 

36 stakeholders took a negative stance towards a possible change of methodology highlighted 
that  several  hundreds  of  thousands  or  millions  of  jobs  would  be  at  risk  if  the  EU  would 
change the methodology, some indicating that China cannot be considered a market economy 
given  the  five  technical  criteria  and  that  a  change  in  methodology  could  have  adverse 
consequences for the EU industry and economy as a whole, as there would be no level playing 
field. A number of stakeholders expressed their concern about the survival of their particular 
industry in the face of a surge of cheap imports on the EU market if the methodology was to 
be changed. According to these stakeholders, EU producers would face unfair conditions and 
their market shares would be severely reduced. 

IV.4. Position papers 
A  number  of  stakeholders  expressed  their  views  on  the  possible  change  of  methodology  in 
dedicated position papers. There were 19 such submissions. Whilst many voice their concerns 
on  the  potential  effect  of  a  change  towards  the  “standard  methodology”  could  have  on  the 
industry and the future effectiveness of trade defence instruments, others also point out that 
not  changing  the  methodology  could  have  a  negative  effect  on  the  relationship  between  the 
EU and China. 

Those in favour of changing the methodology argue there is a clear commitment to grant MES 
in  China's  Accession  Protocol  to  the  WTO.  According  to  these  stakeholders,  good  trade 
relations with China are necessary for the EU's economy. The potential damage resulting from 
not  changing  the  methodology  needs  to  be  taken  into  account.  Changing  the  methodology 
would not lead to the EU not being in position to defend itself against unfair trading practices 
from China.  

Those taking a more neutral position call for legal clarification on whether the EU is legally 
bound by international law to change the methodology. If there is no binding obligation, they 
note, the EU's decision should be linked to the fulfilment of the technical criteria for market 
economy as currently laid down in the relevant trade defence legislation.  

The  majority  of  position  papers  take  a  stand  against  a  possible  change  in  methodology.  A 
number of stakeholders argue that Article 15(a)(ii) of the China's Accession  Protocol to  the 
WTO does not entail an automatic acknowledgement of market economy status and that the 
EU  should  not  do  so  until  China  can  prove  beyond  reasonable  doubt  that  it  fulfils  the 
necessary criteria to be considered a market economy. Some point out the fact that China has 
not  provided  any  new  information  since  2011  on  its  progress  toward  becoming  a  market 

60 

 
 
 
 
 
economy and call for an assessment by the EU of the current  status of these  five criteria in 
China. 

Many contend a unilateral decision of the EU to change the methodology would have severe 
consequences for growth, employment, investment, job creation and manufacturing. It would 
render  trade  defence  instruments  less  effective,  leaving  the  EU  industry  defenceless,  its 
survival threatened. Some note that a decision on this issue should be taken with the EU's key 
trading partners and point out that among those partners there is no agreement to the end that 
Article  15(a)(ii)  of  China's  Accession  Protocol  to  the  WTO  would  automatically  entails 
granting of market economy status.  

61 

 
 
 
 
 
 
Annex 2.1 

Stakeholder Conference - report 

EXECUTIVE SUMMARY 

DG  Trade  organised  a  stakeholder  conference  in  the  framework  of  the  Impact  Assessment 
being  carried  out  by  the  European  Commission  regarding  a  possible  change  in  the 
methodology  to  establish  dumping  in  trade  defence  investigations  concerning  the  People’s 
Republic of China (‘China’).  

The aim of the conference was to allow stakeholders to be heard and exchange views on this 
important issue of the EU’s trade defence system. All the elements brought forward during the 
conference  will  serve  the  Commission  services  as  an  important  additional  source  of 
information to be taken into account in the Impact Assessment.  

The conference was attended by around 300 participants and around 30 speakers, representing 
a  large  variety  of  stakeholders,  intervened.  Commissioner  Malmström  gave  an  introductory 
speech  followed  by  questions  and  answers.  The  conference  was  chaired  by  L.  Rubinacci 
(Director, Directorate H, DG Trade). 

The stakeholder representation was overall balanced and included EU producers and producer 
associations,  EU  importers,  traders,  users  and  their  associations,  MEPs,  trade  unions,  the 
Chinese mission and chamber of commerce, and lawyers. The views expressed were balanced 
and covered the most relevant issues at stake in view of a possible change of methodology, in 
particular:  

Some  stakeholders  were  of  the  opinion  that  following  the  expiry  of  certain  provisions  of 
Section  15  of  China’s  Protocol  of  Accession  to  the  WTO,  the  EU  had  a  legal  obligation  to 
change  the  methodology,  when  calculating  the  dumping  margin  in  cases  involving  China 
(mainly  the  Chinese  mission,  lawyers,  traders).  By  not  changing  the  methodology  the  EU 
would  be  in  breach  of  its  WTO  obligations  and  thus  liable  to  legal  challenges.    Other 
stakeholders (mostly Union producers and some lawyers) did not think that that was the case.  

Some  stakeholders  were  of  the  opinion  that  the  current  EU  TDI  system  worked  well  and 
nothing  should  be  changed  in  order  to  ensure  its  continued  effectiveness.  Others,  however, 
claimed  that  due  to  the  lesser  duty  rule,  duty  levels  currently  applied  were  insufficient  in 
certain cases, and put EU industry at a competitive disadvantage, as compared to competitors 
in other countries, who do not apply the lesser duty rule.  

Some stakeholders claimed that applying the standard methodology would create significant 
problems especially for Union producers. Dumping margins and duty levels calculated on the 
basis of prices and costs in China would be too low in order to offset the injury caused to the 
EU  industry  by  dumped  imports  from  China,  in  particular  due  to  the  various  distortions 
existing  in  the  Chinese  market.  A  very  concrete  threat  of  injury,  due  to  the  significant 
overcapacities of Chinese industries in many sectors, was also highlighted in this context.   

62 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other stakeholders were of the opinion that the current methodology (based on an analogue 
country)  was  inappropriate,  as  depending  on  which  analogue  country  is  used,  dumping 
margins can vary significantly. Furthermore, in many cases, the proxy used is one producer in 
one  country,  which  often  does  not  reflect  the  situation  in  the  export  market  concerned  and 
leads to inflated dumping margins.  

Regarding the various elements of option three (grandfathering, dealing with distortions, anti-
subsidy  element)  many  stakeholders  needed  clarification  and  were  concerned  about  its 
legality and feasibility in practice.   

The  Commission  listened  to  all  the  arguments,  replied  to  questions  and  clarified  certain 
issues.  However,  many  questions  could  not  be  answered  at  this  stage,  because  the  Impact 
Assessment,  to  which  the  conference  provides  important  input,  is  still  ongoing.  Only  at  the 
end  of  that  process,  the  answers  to  all  the  questions  will  be  available  and  the  best  possible 
way forward will be defined. 

INDIVIDUAL INTERVENTIONS 

Commissioner Malmström’s speech focused on the need for the EU to take a decision as to 
how  to  react  to  the  expiry  of  certain  provisions  of  Section  15  of  China’s  Protocol  of 
Accession  to  the  WTO.  She  recalled  the  main  options:  (i)  do  nothing,  (ii)  change  the 
calculation methodology, or, (iii) change the methodology in combination with accompanying 
measures.  She  reminded  participants  that  every  option  has  consequences  and  costs.  Doing 
nothing  could  lead  to  friction  with  China,  disputes  and  resulting  uncertainty.  By  doing 
nothing the EU would hand over its democratic rights to act to a Panel in Geneva. Changing 
the methodology would have costs for producers but also benefits for importers and users.  

Questions put to Commissioner Malmström centred around the legal consequences of options 
1 and 3, the consequences of the Biodiesel ruling, the EU should coordinate with other WTO 
members (e.g. US) before taking a decision, the link between TDI modernisation and market 
economy  status  (‘MES’)  China,  if  any,  and  the  steel  communication,  the  very  low  AD 
measures imposed by the EU as compared to other users (e.g. US). 

Industry and industry associations 

AEGIS Europe explained that AEGIS represents 30 EU manufacturers and associations with 
a turnover of around 500 billion. Granting MES would render the TDI ineffective and result 
in job losses in the range of 300.000. China does not play by the rules since, of the five MES 
criteria, only one has been fulfilled. This is reflected in the high number of measures (80% of 
measures in force worldwide concern China). The burden of proof to show that it is a market 
economy  is  on  China.    There  is  no  legal  obligation  to  grant  MES  because  article  15(d) 
remains in force. The EU needs to coordinate with the US. Any methodology using Chinese 
prices  and  costs  would  result  in  no  dumping  margins.  AS  will  not  solve  the  problem  as 
subsidy schemes are not transparent and often not specific.  

63 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
recalled 

the  position  paper  of  December  2015  and 

BUSINESSEUROPE 
that 
Businesseurope’s position is balanced given the various interests it represents. Businesseurope 
highlighted that WTO and EU rules must be respected and that the expiry of certain sections 
of  China’s  Accession  Protocol  does  not  lead  to  an  automatic  granting  of  MES.  The  Impact 
Assessment needs to take into account the real situation in China. The EU should coordinate 
with  the  US  and  Japan  to  avoid  any  trade  divergence.  The  TDI  in  place  are  effective 
mechanisms  to  defend  the  competitiveness  of  EU  industry,  MES  has  a  great  potential  to 
negatively  affect  this.  The  relationship  with  China  is  complex  and  a  balanced  approach  is 
necessary.    

EUROFER  advocated  for  a  general  move  to  increase  the  effectiveness  of  trade  defence. 
Eurofer  underlined  the  massive  overcapacities  in  China  (in  steel  400  mill  tonnes,  which 
correspond to twice EU consumption) and that Chinese prices are below variable costs. This 
is  the  direct  result  of  the  Chinese  planned  economy  and  subsidisation.  The  EU  is  suffering 
most from this development as imports from China increased by 140% since 2013 and prices 
decreased  by  50%.  Other  partners  have  steel  import  tariffs  and  minimum  import  prices  in 
place (India) or very high trade defence measures (US). Consequently, these factors combined 
with  the  lesser  duty  rule  and  the  little  impact  of  AS  cases,  the  EU  industry  suffers  from  a 
significant competitive disadvantage. If MES were granted dumping margins would be very 
low and often lower than the injury margin, thus the removal of the lesser duty rule (‘LDR’) 
would become irrelevant. 

Cerame-Unie  explained  that  Cerame-Unie  represents  around  200.000  direct  jobs  of  which 
around 100.000 relate to products currently covered by AD measures. Around one third of the 
EU  production  is  exported.  80%  of  producing  companies  are  SMEs.  Main  products  are 
sanitary ware, tableware, wall and floor tiles and refractories. Ceram-Unie said that it is not 
only the direct jobs that have to be taken into account but also indirect jobs and the whole EU 
value chain, e.g. there are 6000 jobs in Italy related only to ceramic machinery. In the table 
ware  case,  the  AD  duties  also  helped  saving  the  kaolin  producers  (raw  material  in  the 
ceramics  production)  in  Portugal.  Between  2004  and  2011  the  Chinese  market  share  of 
tableware  in  the  EU  had  increased  from  22%  to  67%.  Following  the  imposition  of  the  AD 
duty, import volumes decreased from 60 million to 20 million. The ceramics industry has still 
important clusters in the EU, in particular in Italy, the UK and France. Research and design 
are very important in the sector as the EU is the world leader in quality and durable ceramic 
products. Cerame-Unie urged not to weaken the instruments.   

Federation of German Industries BDI considered that MES China is a tricky issue since the 
interests of all need to be taken into account. BDI asked that the Commission share its legal 
assessment with stakeholders. In case there is no legal obligation to grant MES in December 
2016, it should be granted on the basis of the five criteria. China should urgently deal with its 
overcapacities. Close cooperation with the US is important and a common position should be 
reached in the context of the G7. BDI is working on a position paper. Regarding the various 
options, in their view option 1 bears a high risk of a trade conflict and option 2 would weaken 
TDI.  The  WTO  compatibility  of  option  3  is  doubtful  and  it  also  contains  several  practical 
problems,  i.e.  grandfathering  is  a  short  term  solution,  the  LDR  will  become  irrelevant  and 
concerning AS, cooperation from China would be needed. BDI asked the Commission to look 

64 

 
 
 
 
 
 
 
 
 
for  more  ideas  than  those  on  the  table,  e.g.  sector  solutions  or  a  price  basket  instead  of  the 
analogue country methodology.  

Confederation  of  the  European  Bicycle  Industry  highlighted  that  in  2015  total  EU 
consumption  was  20  million  bicycles,  12  million  of  which  were  produced  in  the  EU.  The 
bicycle industry is the largest employer of the green industries in the EU with around 70.000 
direct and indirect jobs in 20 Member States. In this context the Confederation recalled that 
according to an Italian study a bicycle produced in China generates up to 123 kg more CO2 
than a bicycle produced in the EU. This is due to the combined effect of the CO2 emissions of 
the  aluminium  and  steel  production  and  maritime  transport.  Due  to  the  EU’s  deficit  in  the 
trade  balance  with  China,  60%  of  containers  go  back  to  China  empty.  Furthermore,  the 
Confederation reminded that TDI aim at restoring a level playing field and not at protecting 
an  industry.  In  China  the  bicycle  industry  benefits  from  5  year  plans,  which  leads  to  huge 
overcapacity. Without AD duties there would be no more bicycle production in the EU. Once 
the industry disappears, R&D and high value added activities will also disappear.  

ESTA  European  Steel  Tube  Association  pointed  to  the  problem  of  the  enormous  over 
capacities in China. Capacity utilisation rate of 66% in China is not viable. China agrees to 
tackle overcapacity on crude steel but not downstream. The five MES criteria remain relevant. 
Duties in the EU are too low due to the LDR and the too low target profit (3 to 5%). AS duties 
are largely insufficient.  

Fedil Business Federation Luxembourg underlined that MES is a very important issue for 
the  LU  steel  industry,  which  is  the  largest  employer  in  LU  (2000  jobs).  MES  should  be 
granted in accordance with WTO and EU rules, i.e. on the basis of the five MES criteria. The 
Impact  Assessment  should  not  only  analyse  the  economic  impact  but  also  the  social  and 
environmental  impacts.  It  is  estimated  that  CO2  emissions  would  increase  by  43%  if  MES 
were  granted.  Coordination  with  US  and  others  is  important.  If  EU  were  to  grant  MES 
unilaterally TTIP may be put in danger.   

Eurometaux  represents  the  non-ferrous  metal  industry,  which  accounts  for  around  500.000 
jobs  and  which  is  part  of  a  strong  value  chain  covering  3  million  jobs  in  total.  Eurometaux 
pointed  to  China’s  overcapacities  in  many  sectors  (aluminium,  copper,  tin)  due  to  State 
industrial policy. Granting MES would mean a license to dump. Eurometaux considered the 
“mitigating” measures of option 3 a smoke screen. Euromataux called for free, but fair, trade 
and for the modernisation of TDI in order to ensure adequate measures.   

A3M, alliance of minerals, ores and metals defended similar interests as Eurometaux. A3M 
represents  400  companies  and  80.000  jobs  (SMEs  and  international  companies).  A3M 
explained that the French Minister Macron launched a strong initiative and welcomes the steel 
communication.  A3M  hoped  that  the  Commission  and  Member  States  will  find  a  solution 
soon and invited the Commission to liaise with the EP. The steel industry is not an industry 
from the past but for the future.   

Polish  Steel  Association  considered  that  there  is  no  legal  obligation  to  grant  MES.  Final 
interpretation  is  up  to  the  WTO  DSB.  The  Polish  steel  industry  has  made  significant 
investments and restructured, which would be wasted if MES were granted. The granting of 
MES should be rules based, but it should not be granted for political reasons. Competiveness 
65 

 
 
 
 
 
 
 
 
 
 
 
vis-à-vis  US,  Japan  or  Canada  needs  to  be  taken  into  account.    Granting  MES  unilaterally 
would result in  significant  trade deflection  from  these  countries to  the EU. The Association 
was critical regarding the public consultation because it only suggests 3 options and sceptical 
about  the  effectiveness  of  option  3.  In  particular,  the  relevance  of  the  LDR  depends  on 
whether it is considered in relation to MES or not. The Association reminded that AS margins 
in past AS cases were almost always lower than the injury margin. 

DE Steel, German Steel Federation agreed with Eurofer and AEGIS. DE Steel is the biggest 
steel producer in the EU with 25% of total production and an important link to different value 
chains in various countries. German exports are steel intensive goods and represent more than 
half of the jobs in Germany. An export oriented industry as this is in favour of open and fair 
markets.  Therefore,  affective  TDI  is  important.  There  is  no  legal  obligation  to  grant  MES. 
Coordination  with  US  is  important  as  granting  MES  unilaterally  would  mean  significant 
disadvantages for the EU industry.  

Czech  Steel  Association  is  a  member  of  Eurofer  and  fully  supports  Eurofer.  MES  should 
only be granted if China meets the five criteria. Steel consumption is at the top of the list of 
products consumed. The Association reminded that the EU was founded on “coal and steel”. 

EMPA, European Melamine Producers Association explained that melamine is a chemical 
used  e.g. in laminate flooring or  worktops.  The AD duty  of 65%  will expire in  May 2016. 
The US has an AD duty of 500% in place. The Association emphasised the overcapacity in 
China  which  results  in  a  capacity  utilisation  rate  of  55%.  Furthermore,  the  production  in 
China  is  still  coal  based.  The  Association  considered  that  the  3  options  suggested  by  the 
Commission were very narrow and further options should be provided.  Regarding option 3, 
using Chinese prices and costs would lead to very low or 0 dumping margins and huge import 
volumes.  The  distortions  are  so  widespread  that  it  would  be  impossible to  tackle them  with 
cost adjustments.  

Fertilizers Europe fully supports AEGIS. Fertilizers Europe reminded that trade defence is 
about international trade justice. It was created in order to protect EU industry and to avoid 
another  1930's  situation.  If  no  solution  is  found  now,  there  will  be  more  problems  in  the 
future.  The  analogue  country  methodology  or  cost  adjustments  seek  to  establish  a  ‘normal’ 
value. Cost adjustments are also applied in  market economy countries. The burden of proof 
that  it  is  a  market  economy  lies  with  China.  Fertilizers  Europe  reminded  of  TDI 
modernisation, is in favour of faster measures and a higher target profit. The LDR proposal 
would have no significance if MES were granted.   

Importers, traders, users and their associations 

Foreign Trade Association reminded that retailers, importers and distributors in the EU rely 
on  imports,  inter  alia,  from  China.  The  use  of  the  analogue  country  methodology  leads  to 
artificially high dumping margins and AD duties. The international obligation regarding MES 
China  is  clear  and  must  lead  to  the  abolition  of  the  analogue  country  methodology.  While 
referring  to  concerns  raised  by  some  stakeholders  in  this  regard,  he  reminded  that  there  are 
options  to  offset  any  negative  consequences  of  granting  MES  (some  of  which  could  be 
affected  by  the  Biodiesel  report).  Treating  China  as  a  market  economy  will  not  result  in  a 
66 

 
 
 
 
 
 
 
  
 
 
 
 
flood  of  imports  and  the  impact  on  jobs  and  the  social  impact  will  be  much  lower  than 
claimed by some.  

EuroCommerce  explained  that  EuroCommerce  represents  30  million  people,  6  million 
companies,  one  job  out  of  seven  in  the  EU.  In  a  rules-based  trading  system  the  legal 
obligation  is  clear.  The  intent  of  China’s  Protocol  of  Accession  to  the  WTO  is  to  use  the 
market  economy  methodology  as  of  December  2016.  The  five  MES  criteria  become 
irrelevant. The EU has means to ensure effective TDI. A proposal should be adopted as soon 
as  possible  in  order  to  avoid  WTO  disputes.  The  analogue  country  methodology  leads  to 
distorted dumping margins. Free trade must work in both directions and a trade war must be 
avoided. TDI severely affect downstream industry and have negative effects on welfare (users 
and consumers), which must be taken into account.  

FRUCOM  recalled  the  experience  of  the  canned  mandarins  case  of  2007.  Due  to  the 
analogue country methodology the duties were artificially high (higher than in the complaint). 
The calculation was not transparent and the process unpredictable. FRUCOM is in favour of 
granting MES.  

WACKER  Chemie AG  explained that Wacker  produces polysilicon, a key raw material in 
the  solar  supply  chain.  It  is  a  company  with  global  presence  (around  80%  of  its  sales  are 
outside Germany, and around 17.000 employees). Wacker considered that trade disputes are 
hurdles that cause damage to all involved. Confrontation is not the way forward. The EU can 
still  apply  TDI  after  granting  MES.  The  analogue  country  methodology  results  in  highly 
inflated  dumping  margins.  MES  will  not  destroy  jobs  in  the  EU.  Not  granting  MES  will 
increase prices for users and tax payers. Good relations with China are essential. How can we 
expect China to play by the rules if the EU does not? The steel issue needs to be dealt with 
separately  and  should  not  cloud  the  issue  of  MES.  Wacker  called  for  de-escalation  of  the 
situation in view of the big progress that China has already made.   

Solar Power Europe recalled that Solar Power Europe has been promoting solar energy for 
the  past  30  years.  It  represents  137  members  of  which  8  are  Chinese.  Solar  Power  Europe 
referred to the solar panel case and reminded that, by using India (one small non-competitive 
company) as analogue country, the normal value was inflated. The whole value chain needs to 
be looked at. The fear of the consequences of granting MES is exaggerated. Jobs would not be 
lost, but to the contrary, in the solar sector 54.000 jobs could be created by 2020. The EU has 
already granted MES to Russia and there was no flood of imports then. Solar Power Europe 
called for a robust Union interest test, as 95% of the EU solar industry is hostage of a tiny part 
of upstream industry.  

European Fastener Distributors Association (EFDA) considered that the analogue country 
methodology leads to unreasonable results. The duty of 85% was based on India as analogue 
country  and  was  repealed  following  a  WTO  ruling.  Such  high  duties  close  the  market  to 
Chinese  imports,  which  goes  against  the  EU’s plea  for  a  level  playing  field.  Granting  MES 
would avoid inappropriate measures. 

NEVIB,  Dutch  Association  of  importers  of  fasteners  recalled  that  7  years  ago  the  sector 
was taken by surprise with the imposition of a very high duty, and later again, when the duty 
was repealed. These ups and downs create too much uncertainty in the market. NEVIB agrees 
67 

 
 
 
 
 
 
 
 
 
 
 
that when there is dumping it needs to be tackled. NEVIB is in favour of change, in order to 
improve transparency, predictability and appropriateness of measures.  

Lawyers 

NTCM strongly criticised the consultation process as not being in line with the Commission’s 
better regulation rules, calling it a charade. The current methodology has to be changed. The 
Commission’s proposed package is incoherent and inconsistent. It cannot grant MES on one 
hand and move away from Chinese costs and prices on the other. 

Van  Bael  &  Bellis  recalled  that  it  was  always  clear  that  certain  provisions  of  Section  15 
would  expire  after  15  years.  Option  3  has  many  WTO  problems:  grandfathering  is 
incompatible  with  the  prospective  system,  which  is  based  on  an  investigation  period  in  the 
past. That is why there is the possibility of refund and review. Regarding cost adjustments, the 
answer  will  be  provided  by  the  report  in  the  case  Biodiesel  Argentina.  The  LDR  is  about 
injury and not about dumping and removing it can therefore not substitute for low dumping 
margins. The LDR is a sound feature of the EU TDI system in order not to impose duties in 
excess of injury. The proposal to investigate unidentified subsidies is WTO inconsistent. 

Fieldfisher LLP reminded that MES is about a change in the methodology when calculating 
dumping  in  relation  to  China.  Fieldfisher  considered  that  the  public  consultation  is  oriented 
towards  option  3.  Fieldfisher  asked  what  the  legal  obligation  is,  regarding  the  expiry  of 
certain provisions of Section 15, if any. The US has negotiated this position in 1999 and full 
meaning  should  be  given  to  the  remains  of  section  15.  If  the  EU  were  to  grant  MES,  what 
would be the relevance of the five MES criteria?  

HFW  recalled  the  Commission  position  in  this  regard  in  the  Fasteners  dispute  (2010)  and 
expressed by Commissioner De Gucht ( 2013), where it was made clear that MES would be 
granted in 2016. HFW recalled that there are no clear criteria of what is a market economy 
and  evoked  that  under  certain  circumstances  the  Netherlands  and  Belgium  could  also  be 
considered as non-market economies.    

DS  Avocats  who  represents  Chinese  exporters  in  Canadian  investigations  recalled  the 
Canadian system, where the domestic industry has to make an allegation of distortions in the 
complaint.  Once  the  complaint  is  accepted  the  burden  shifts  to  the  exporter.  The 
determination  whether  non-market  conditions  prevail,  or  not,  depends  on  the  product.  The 
approach  is  an  industry  by  industry  approach  on  a  micro  and  not  a  macro  level  (e.g.  the 
aluminium sector is considered to operate under non-market economy conditions).  

Philippe&Partners  considered  that  the  legal  obligation  is  clear  and  cannot  be  subject  to 
stakeholders’  vote.  The  EU  cannot  give  in  to  commercial  protectionism.  The  Commission 
needs  to  do  more  work  in  order  to  be  able  to  use  adjusted  costs  in  case  of  distortions.  Not 
granting MES equals inadmissible discrimination vis-à-vis China. 

Others   

68 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ms. Inmaculada Rodríuez-Piñero (MEP) criticised the public consultation as being biased 
towards  granting  MES  and  that  it  did  not  contain  any  open  questions.  S&D  is  opposed  to 
granting MES unilaterally. The EU should coordinate with other WTO  members as they all 
face the same issue. China is not a market economy and MES should be granted only on the 
basis  of  compliance  with  the  five  MES  criteria.  Furthermore,  she  iterated  that  in  EU  AD 
investigations  it  takes  too  long  to  impose  provisional  measures  (unlike  e.  g.  in  the  US  or 
Brazil). The LDR should be eliminated as it puts EU industry at a competitive disadvantage as 
compared to other users of TDI who impose higher duties. She urged the Commission and the 
Member States to conclude the modernisation process.     

Mr. Andres Barceló (EESC/UNESID) considered that granting MES would have a serious 
impact on EU jobs. He pointed to the significant Chinese overcapacities in many sectors such 
as glass, paper or steel, which China has acknowledged and which can, in the short term, only 
be addressed with effective TDI. He highlighted that the EU market was very open with  the 
lowest duty levels (e.g. on the same product EU 16%, US 266%). He warned against trading 
goods for jobs. An industry exiting a market takes also other high value added activities such 
as R&D with it. He expressed his disappointment over the lack of transparency regarding the 
economic study commissioned by the EU. He concluded by inviting stakeholders to a hearing 
in the EESC on 5 April 2016. 

IndustrieALL  European  Trade  Union  made  a  distinction  between  modernising  and 
dismantling  TDI.  He  welcomed  the  Steel  Communication  but  highlighted  that  without  a 
dumping  margin,  TDI  becomes  meaningless.  IndustrieALL  was  very  concerned  about  the 
future  of  the  EU  industry.  The  EU  should  avoid  losing  its  industrial  base  to  China.  After 
granting MES, sectors such as steel, aluminium, glass or cement could be lost to China, which 
would reach a monopoly position and then impose its prices and standards. This would also 
have  significant  negative  consequences  for  the  environment  (Chinese  industry  being  much 
more polluting than the EU industry). The employment impact can be estimated between the 
maximalist  Scott  study  and  the  minimalist  Commission  study,  but  would,  in  any  event,  be 
significant,  with  consequences  for  the  EU  social  model.  In  this  context,  IndustrieALL 
mentioned  that  China  signed  up  to  only  four  of  the  eight  International  Labour  Organisation 
(ILO) conventions. Moreover, if MES were granted, China would have no incentive to further 
reform its economy.    

Chinese  Mission  to  the  EU  considered  that  granting  MES,  following  the  expiry  of  certain 
provisions of Section 15, is a separate issue from whether China is a market economy or not. 
The  EU  must  fulfil  its  obligations  and  terminate  the  analogue  country  methodology  by 
December  2016;  otherwise  the  EU  would  be  in  breach  of  WTO  rules.  Not  granting  MES 
would be a step back in the EU’s promotion of free trade.  

China  Council  for  the  Promotion  of  International  Trade  insisted  that  MES  is  a  purely 
technical issue related to the determination of normal value. There are no WTO rules how to 
determine a market economy. Certain provisions of Section 15 will expire in December 2016 
and that has clear consequences. The EU has to comply with its WTO obligations and not use 
the analogue country methodology after December 2016. China should not be discriminated 
against, otherwise China will go to the WTO. By not changing the methodology the EU will 
endanger  the  EU/China  relationship  in  particular  regarding  investments  (e.g.  in  the  car 

69 

 
 
 
 
 
 
 
 
 
industry) or EU/China negotiations. The expiry of certain provisions of Section 15 is the right 
time to change the methodology.   

China Chamber of International Commerce EU Representative office explained that the 
legal obligation arising from the expiry of certain provisions of Section 15 is clear. The EU 
can no longer apply the analogue country methodology after December 2016. The Fasteners 
ruling is decisive.  

70 

 
 
 
 
 
 
 
 
 
Annex 2.2 

Consultation meeting with social partners - report 

On  15  April  2016,  the  Commission  services  organised  a  consultation  meeting  with  social 
partners  in  the  framework  of  the  Impact  Assessment  currently  carried  out  on  a  possible 
change  in  the  methodology  to  establish  dumping  in  trade  defence  investigations  concerning 
the peoples’ Republic of China.  

The  aim  of  the  meeting  was  to  provide  social  partners  with  an  additional  opportunity  (in 
addition to the ongoing online consultation and the stakeholder conference which took place 
on  17 March)  to  express  their  views  on  the  issue.  On  the  employers  side,  the  meeting  was 
attended  by  representatives  of  BusinessEurope,  UEAPME  (European  Association  of  Craft, 
Small and Medium-Sized Enterprises), CEEP (European Centre of Employers and Enterprises 
providing  Public  Services),  EUROFER,  Euromines,  ECEG  (European  Chemical  Employers 
Group), CEC (European Confederation of the Footwear Industry) and Sea Europe (European 
Ships  and  Maritime  Equipment  Association).  Cross-sectoral  as  well  as  sectoral  associations 
were  therefore  represented.  For  trade  unions,  ETUC,  industrieAll,  CGIL  (Italian  Labour 
Confederation), GSEE (General Confederation of Greek Workers) and IG Metall participated. 

The  interventions  of  the  social  partners  as  well  as  the  subsequent  discussion  in  the  plenary 
meeting  confirmed  that  the  social  partners  follow  the  topic  were  closely  and  are  willing  to 
actively  engage  with  the  Commission  in  a  constructive  solution-oriented  discussion.  The 
social  partners  generally  acknowledged  in  the  meeting  that  the  expiry  of  the  relevant 
provisions  of  the  Protocol  in  December  2016  will  have  to  be  reflected  in  the  trade  defence 
proceedings (i.e. the current system of calculating dumping based on an obligation to use the 
analogue  country  method  cannot  be  continued  unchanged).  From  this  starting  point,  a 
convergence of views among the social partners emerged on the following points: 

-  under  the  Protocol,  there  is  no  automatic  obligation  to  apply  the  standard  method  for 
dumping calculation, and therefore treat China like any other market economy country, 
post 11 December 2016; 

-  it is only one part of Section 15 of the Protocol that expires in December; the unions as 
well as the employers emphasized strongly that in their view the surviving provisions of 
the Protocol need to be given meaning a purpose when designing a solution; 

-  the EU should coordinate its approach with other major trading partners; 

-  the  social  partners  are  willing  to  actively  engage  in  searching  for  solutions  (they 
acknowledge that the current methodology also has its shortcomings, in particular in can 
be considered too rigid). 

A  number  of  additional  points  were  raised,  ranging  from  the  possible  impacts  on  trade 
relations  with  China  (in particular  investment)  to  China's  role  as  both  competitor  to  the  EU 
industry as well as an important supplier.  

71 

 
 
 
 
 
 
Annex 3:  Who is affected by the initiative and how? 

This annex aims at: 

 

 

setting  out  the  practical  implications  (such  as  key  obligations  or  timescale)  of  the 
initiative  for  a  representative  enterprise  and/or  public  administration  (or  particular 
groups or individuals if directly regulated), 

describing the actions that the enterprise or public authority might need to take in order 
to  comply  with  the  obligations  under  the  proposed  intervention  and  indicate  wherever 
possible the likely costs to be incurred in meeting those obligations. 

On  the  basis  of  the  preferred  option  –  Option  3  -  the  current  anti-dumping  (AD)  and  anti-
subsidy (AS) legislation would be changed in order to provide for: 

(1) an alternative calculation methodology, 
(2) transition periods for existing measures,  
(3) and  AS  schemes  found  in  the  course  of  the  investigation  would  be  covered  by  the 

investigation. 

The  enterprises  affected  by  TDI  are  typically  EU  producers,  importers,  downstream 
industrial users, or exporting producers in third countries.  

The possible changes proposed to the anti-dumping methodology do not imply any additional 
obligations  or  specific  actions  that  the  parties  concerned  by  investigations  would  have  to 
comply with. They do not impact on the investigative process as such, or on the collection of 
information  on  the  basis  of  questionnaires.  There  would  thus  not  be  additional  costs  for 
parties cooperating in investigations.  

The  public  authority  carrying  out  TD  investigations  is  the  Commission.  The  proposed 
changes will mainly effect how the information collected during investigations is used. This 
will not have any major implications regarding resources or costs. 

Any additional work that may occur in relation to an alternative calculation methodology will 
be  offset  by  not  having  to  investigate  a  producer  in  an  analogue  country  (analysis  of 
questionnaire replies, verification visit in the analogue country). The transition periods would 
avoid a flood of interim reviews after December 2016 which might be difficult to handle. The 
changes 3 and 4 do not impact on workload as they are part of investigations under current 
rules already (3) or would be part of the on-spot verification visit as currently carried out (4).    

72 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annex 4 

ANALYTICAL MODELS USED IN PREPARING THE IMPACT ASSESSMENT 

The  models  used  for  this  Impact  Assessment  is  a  tailor-made  development  for  the  specific 
purpose of the MES China analysis. It has been established by Hylke Vandenbussche and Jo 
Van  Biesebroeck  from  the  Catholic  University  of  Leuven  in  Belgium.  Both  are  renowned 
economic  experts  and  in  particular  Ms.  Vandenbussche  is  one  of  the  world's  leading 
researchers in the field on economic analysis of TDI.  

The main indicator that the analysis produces is the employment in the firms that are directly 
and, via input-output relationships indirectly, affected by dumped imports from China. Other 
indicators,  in  particular  GDP  have  not  been  addressed  on  account  of  the  rather  limited 
magnitude of the trade at stake compared to overall EU trade. 

Below,  a  brief  technical  description  of  the  quantitative  model  which  is  excerpted  from  the 
study informing this impact assessment: 

The analysis proceeds in four consecutive steps with a natural progression, as each step takes the output of 
the previous step as input. The objective is to obtain an estimate for the differential employment effects on 
the EU if it were to grant China MES in AD investigations. 

Step 1: Revisiting the expected employment effects in the 10 selected AD cases 

We start with an independent assessment of the direct employment effects in the 10 anti-dumping cases 
the  Commission  selected  for  the  purpose  of  this  study  which  allowed  us  to  use  detailed  (confidential) 
information. The reduction in AD duties under the new methodology, as calculated by the Commission, is an 
important input to this analysis. Our approach consists in the estimation of a partial equilibrium model that 
relies on two separate sets of elasticities used to construct multipliers. It involves the estimation of i) import-
demand elasticities of Chinese imports on Chinese prices and ii) EU employment elasticities with respect to 
Chinese imports. In combination they generate an elasticity of EU employment with respect to import tariffs 
(percentage change in EU jobs/percentage change in tariffs on Chinese products).  

Simply  rescaling  the  estimated  effects  for  the  10  cases  to  all  TDI-sensitive  sectors,  we  obtain  the 

expected effects under Scenario 1. 

Step 2: Assessing the likelihood each EU sector will face dumping by Chinese firms 

To estimate the impact on the entire tradable goods sector of granting MES to China, we need to resolve 
two issues. The first issue is to assess for each sector in the EU how likely a random product is to suffer from 
Chinese dumping. We assign all current AD cases to a 4-digit HS product category and calculate what share 
of trade in the category is affected in these cases. We then aggregate these shares to the sectoral level of the 

73 

 
 
 
 
 
 
 
 
 
 
 
World  Input-Output  Database  (WIOD)  to  obtain  a  sector-specific  probability  that  a  product  is  subject  to 
dumping by Chinese firms. 47 

We calculate these probabilities under two scenarios. Scenario 2 represents the current situation. It relies 
on all existing AD measures of the EU against China. The aggregate results of Scenario 2 capture the short-
term effects of the change in methodology, where we only consider the same Chinese products are dumped as 
before  but  now  the  assessment  of  anti-dumping  duties  by  the  EU  will  be  according  to  market  economy 
methodology. As it assumes that product coverage remains the same, we label this scenario as “short-run”. 
Scenario 3  additionally  considers  a possible  expansion  in the  range of dumped products  by  Chinese  firms. 
We refer to this as “long-run” effects because we now allow for the possibility of new AD-cases in the future 
in products that thus far have not occurred under EU TDI cases.  

Step 3: Generalizing the direct employment effects of Chinese MES status for the entire economy 

The second issue we need to resolve is to develop a methodology to predict employment effects that can 
be applied without observing the same detailed information available in the 10 cases (in step 1). We use a 
sector-specific  semi-elasticity  that  measures  the  percentage  reduction  in  employment  for  each  percentage 
point reduction in AD duty to quantify the effect of the new methodology on EU employment. We use the 
average  of  these  semi-elasticities  estimated  in  step  1  as  starting  point,  but  adjust  them  for  the  import 
penetration from China and the Rest-of-the-World to allow for heterogeneous effects across sectors. 

We  obtain  the  aggregate  effects  by  multiplying  these  adjusted  semi-elasticities  (from  step  1)  with  the 
predicted  reduction  in  AD  duties  (from  the  Commission)  and  the  probability  each  sector  is  affected  (from 
step 2). Using two sets of estimates for two scenarios, we obtain 4 estimates.  

Step 4: Adding indirect employment effects 

Finally,  we  estimate  the  indirect  effects,  or  the  effects  in  upstream  and  downstream  sectors.  We  first 
discuss at a theoretical level which effects we expect and whether they are likely to magnify or cushion the 
direct  effects.  We  next  illustrate  that  the  sectors  where  anti-dumping  action  against  China  is  likely  are 
relatively  upstream,  which  means  positive  effects  will  be  relatively  important.  Finally  we  quantify  the 
indirect  employment  effects  upstream  and  downstream  exploiting  the  detailed  information  in  the  World 
Input-Output Database. 

The choice of an external expert rather than an internal analysis has been made deliberately so 
as to provide a maximum of specific analytical expertise. As the model has been developed 
for  this  very  exercise,  peer-review  and  validation  by  third  experts  are  not  yet  available  by 
definition.  

47 The dumped products in the 10 AD-cases are classified in a total of 13, 4-digit HS product categories (many 
cases comprise a large set of products). From the detailed information of the 10 AD-cases we can ascertain that 
the dumped products account for 22% of the total Chinese imports into the EU in these 13, 4-digit categories. 
From the entire list of 52 existing AD-cases involving China, we identify all 4-digit product categories with at 
least one product involved in a case. In those categories we consider 22% of Chinese imports subject to TDI 
measures (with an adjustment for categories with multiple cases). In the remaining 4-digit categories there are 
currently no TDI measures against China and none of the Chinese imports is subject to TDI measures. 
Aggregating over all product categories suggests that 2.5% of all Chinese trade is subject to TDI measures. We 
opted for this methodology since it also allows us to assess the indirect employment effects using WIOD in a 
later phase of the analysis. 

74 

 
 
 
 
 
 
                                                 
Uncertainties  in  the  economic  analysis  are  addressed  by  working  with  two  alternative, 
complementary  datasets  from  which  to  perform  the  first  step  of  the  analysis  as  described 
above. This allows presenting a confidence range for all quantitative results.  

The analysis does not have a time dimension and therefore no baseline in the traditional sense. 
The reference scenario, referred to as option 1 in this impact assessment is the status quo in 
both legislation and practice. (For further qualifications please cf. section 5.2.1). 

75 

 
 
 
 
 
 
 
 
Annex 5 

WORLD TRADE 

ORGANIZATION 

WT/L/432 
23 November 2001 

(01-5996) 

ACCESSION OF THE PEOPLE'S REPUBLIC OF CHINA 

Decision of 10 November 2001 

The Ministerial Conference, 

Having regard to paragraph 2 of Article XII and paragraph 1 of Article IX of the Marrakesh 
Agreement  Establishing  the  World  Trade  Organization,  and  the  Decision-Making  Procedures  under 
Articles IX and XII of the Marrakesh  Agreement Establishing the World Trade Organization agreed 
by the General Council (WT/L/93), 

Taking  note  of  the  application  of  the  People's  Republic  of  China  for  accession  to  the 

Marrakesh Agreement Establishing the World Trade Organization dated 7 December 1995,   

Noting  the  results  of  the  negotiations  directed  toward  the  establishment  of  the  terms  of 
accession  of  the  People's  Republic  of  China  to  the  Marrakesh  Agreement  Establishing  the  World 
Trade  Organization  and  having  prepared  a  Protocol  on  the  Accession  of  the  People's  Republic  of 
China, 

Decides as follows: 

The  People's  Republic  of  China  may  accede  to  the  Marrakesh  Agreement  Establishing  the 
World Trade Organization on the terms and conditions set out in the Protocol annexed to this 
decision. 

__________ 

76 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PROTOCOL ON THE ACCESSION OF 
THE PEOPLE'S REPUBLIC OF CHINA 

Preamble 

The  World  Trade  Organization  ("WTO"),  pursuant  to  the  approval  of  the  Ministerial 
Conference  of  the  WTO  accorded  under  Article XII  of  the  Marrakesh  Agreement  Establishing  the 
World Trade Organization ("WTO Agreement"), and the People's Republic of China ("China"), 

Recalling  that  China  was  an  original  contracting  party  to  the  General  Agreement  on  Tariffs 

and Trade 1947, 

Taking note that China is a signatory to the Final Act Embodying the Results of the Uruguay 

Round of Multilateral Trade Negotiations, 

Taking  note  of  the  Report  of  the  Working  Party  on  the  Accession  of  China  in  document 

WT/ACC/CHN/49 ("Working Party Report"), 

Having regard to the results of the negotiations concerning China's membership in the WTO, 

Agree as follows: 

15. 

Price Comparability in Determining Subsidies and Dumping 

Article VI of the GATT 1994, the Agreement on Implementation of Article VI of the General 
Agreement  on  Tariffs  and  Trade  1994  ("Anti-Dumping  Agreement")  and  the  SCM Agreement  shall 
apply  in  proceedings  involving  imports  of  Chinese  origin  into  a  WTO  Member  consistent  with  the 
following: 

(a) 

In  determining  price  comparability  under  Article  VI  of  the  GATT  1994  and  the 
Anti-Dumping  Agreement,  the  importing  WTO  Member  shall  use  either  Chinese 
prices or costs for the industry under investigation or a methodology that is not based 
on a strict comparison with domestic prices or costs in China based on the following 
rules: 

(i) 

(ii) 

If  the  producers  under  investigation  can  clearly  show  that  market  economy 
conditions prevail in the industry producing the like product with regard to the 
manufacture,  production  and  sale  of  that  product,  the  importing  WTO 
Member shall use Chinese prices or costs for the industry under investigation 
in determining price comparability; 

The importing WTO Member may use a methodology that is not based on a 
strict  comparison  with  domestic  prices  or  costs  in  China  if  the  producers 
under  investigation  cannot  clearly  show  that  market  economy  conditions 
prevail in the industry producing the like product with regard to manufacture, 
production and sale of that product. 

77 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(b) 

(c) 

(d) 

In  proceedings  under  Parts  II,  III  and  V  of  the  SCM  Agreement,  when  addressing 
subsidies described in Articles 14(a), 14(b), 14(c) and 14(d), relevant provisions of the 
SCM  Agreement  shall  apply;    however,  if  there  are  special  difficulties  in  that 
application, the importing WTO Member may then use methodologies for identifying 
and  measuring  the  subsidy  benefit  which  take  into  account  the  possibility  that 
prevailing terms and conditions in China may not always be available as appropriate 
benchmarks.  In applying such methodologies, where practicable, the importing WTO 
Member should adjust such prevailing terms and conditions before considering the use 
of terms and conditions prevailing outside China. 

The  importing  WTO  Member  shall  notify  methodologies  used  in  accordance  with 
subparagraph  (a)  to  the  Committee  on  Anti-Dumping  Practices  and  shall  notify 
methodologies  used  in  accordance  with  subparagraph  (b)  to  the  Committee  on 
Subsidies and Countervailing Measures. 

Once China has established, under the national law of the importing WTO Member, 
that  it  is  a  market  economy,  the  provisions  of  subparagraph  (a)  shall  be  terminated 
provided that the importing Member's national law contains market economy criteria 
as of the date of accession.  In any event, the provisions of subparagraph (a)(ii) shall 
expire  15  years  after  the  date  of  accession.    In  addition,  should  China  establish, 
pursuant  to  the  national  law  of  the  importing  WTO  Member,  that  market  economy 
conditions  prevail  in  a  particular  industry  or  sector,  the  non-market  economy 
provisions of subparagraph (a) shall no longer apply to that industry or sector. 

78 

 
 
 
 
 
 
 
 
 
 
 
 
 
Annex 6 

Legal context of other WTO members regarding China and/or other NME countries 

US  
There is no US statute classifying China as a non-market economy (NME) generally. The US 
statute  provides  Department  of  Commerce  (DOC)  with  significant  administrative  discretion 
for determining when a foreign country is a NME.  

The  legal  basis  for  China's  treatment  as  NME  in  AD  cases  is  contained  in  19  U.S.C. 
§1677(18),  which  sets  out  the  factors  which  the  DOC  must  take  into  consideration  when 
making  a  determination  regarding  a  country’s  status  as  a  non-market  economy.  The 
determination of NME status may be made “with respect to any foreign country at any time,” 
and remains effective until expressly revoked by DOC. Moreover, DOC’s determinations are 
not  subject  to  judicial  review.  DOC  has  confirmed  China's  NME  status  in  every  AD 
investigation so far. 

In 2006 DOC received a request from a respondent in the "lined paper" case, supported by the 
Chinese government, to review China's NME status. DOC then issued a memorandum with a 
comprehensive analysis of the NME factors, concluding that China does not meet the relevant 
criteria48 to be considered a market economy. 

Since  the  status  of  China  is  not  laid  down  in  legislation,  granting  MES  can  be  done  by  an 
administrative decision by DOC, either in the context of a concrete AD case, or independently 
from an investigation. 

As a result of the application of the non-market economy methodology to China, DOC bases 
the calculation of normal value for Chinese exporters on 'factors of production' selected in an 
appropriate  foreign  surrogate  country.    The  costs  of  production  borne  by  Chinese  exporters 
are  thus  replaced  by  the  value  of  the  corresponding  factor  of  production  in  the  surrogate 
country.  

Canada 

In  Canada,  the  legal  basis  to  treat  a  country  as  a  non-market  economy  is  contained  in  the 
Special Import Measures Act (SIMA). The countries concerned are identified as a "prescribed 
country" under the Special Import Measures Regulations (the SIMR).  

When  the  provisions  were  enacted  for  China  and  Vietnam,  automatic  expiry  dates  were 
included  (11 December  2016  for  China  and  31 December  2018  for  Vietnam).  These  expiry 
dates were removed in April 2013 "to ensure that Canada’s trade remedy system can continue 

48 (1) currency convertibility, (2) free bargaining for wages, (3) foreign investment, (4) government ownership or 
control of production, (5) government control over the allocation of resources, (6) other appropriate factors. 

79 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
to  take  into  account  whether  these  countries  are  operating  according  to  market  economy 
conditions".  

Changes to the SIMR are adopted by the "Governor in Council on the recommendation of the 
Minister  of  Finance",  who  is  the  minister  responsible  for  SIMA.  Amendments  to  the 
Regulations are therefore  under the control of the council  of  ministers headed by the Prime 
Minister. Changes do not need to be formally adopted by the Parliament. 

Japan 

Japan  currently  uses  criteria  similar  to  the  EU  to  determine  market  economy  conditions.  It 
also has a presumption of NME treatment for China. Japan has initiated joint negotiations for 
a  free  trade  agreement  with  China  and  with  South  Korea.  Like  India,  it  did  not  commit  to 
early recognition of China's MES. Japan had already, at the time of China's request for MES 
in 2007, introduced an amendment to the guidelines for procedures relating to countervailing 
and antidumping duties, setting a December 2016 deadline for the application of NME status 
to China. However, the guidelines are not legally binding and can easily be modified (with no 
legislative procedure required).  

China  probably  did  not  insist  on  early  MES  recognition  from  Japan,  simply  because  Japan 
rarely used anti-dumping measures. The Joint Study Report, which was drafted to evaluate the 
FTA  between  Japan,  China  and  Korea,  contains  a  chapter  on  the  use  of  trade  remedy 
measures. In particular, the study reported that between 1995 and 2010, Japan initiated six AD 
investigations and applied seven AD measures in total, of which only one investigation and 
one measure were respectively initiated and introduced against Chinese imports. In total Japan 
has only one AD measure still in force against Chinese imports. 

80 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annex 7 

TDI Modernisation – the lesser duty rule 

The continued effectiveness and further strengthening of the EU’s TDI is also linked to TDI 
modernisation and the lesser duty rule (‘LDR’).  

During the public consultation, stakeholders, in particular in the steel sector, claimed that due 
to  the  LDR,  duties  are  too  low  to  offset  injury.  The  negative  effect  of  such  low  duties  is 
amplified  in  situations  of  massive  overcapacity  in  the  exporting  country.  In  such  cases,  the 
very  low  import  prices  combined  with  the  very  high  import  volumes  disrupt  the  market 
mechanisms of supply and demand. Thus, a duty based on the injury margin, which primarily 
deals  with  price  injury  is  insufficient  to  also  offset  the  volume  injury.  Such  situations  are 
likely to increase in the future and compromise the effectiveness of the EU’s TDI, as many 
sectors  with  huge  overcapacities  in  China  have  been  identified  (ref.  para  2.3.3  of  the  main 
report).  

As explained at the beginning (section 1 of the main report), the LDR element is part of the 
TDI  modernisation  proposal  of  2013.  It  is  proposed  not  to  apply  the  LDR  in  cases  of 
significant  raw-material  distortions.  Thus,  duties  would  in  those  cases  not  be  limited  to  the 
level of the injury margin (which is not a requirement imposed by the WTO).  

The  effects  of  the  non-application  of  the  LDR  in  such  cases  was  analysed  in  the  impact 
assessment  accompanying  the  TDI  modernisation  proposal.  There,  the  analysis  did  not 
involve a change in the calculation methodology and was based on using the analogue country 
methodology for cases regarding China. Furthermore, the analysis was limited to changes in 
duty levels, but no employment data was available at that time.   

The  current  initiative  deals  with  a  change  in  the  dumping  calculation  methodology  and  its 
impact, in particular on jobs. In order to have a complete picture, it was decided to include in 
this impact assessment also an analysis of the impact of the non-application of the LDR in all 
cases involving China, in combination with a changed calculation methodology. The results 
are  provided  for  information,  in  order  to  show  the  possible effects  of  the  new  methodology 
under option 3, also in the event that the TDI modernisation proposal would be adopted.  

The impact of the non-application of the lesser duty rule (LDR) in cases involving China, in 
combination with a changed methodology:  

While,  the  principle  of  the  LDR  would  continue  to  be  applied  in  many  trade  defence 
investigations, in case the TDI Modernisation proposal is adopted, the LDR would no longer 
be applied in specific cases. This would lead to higher duties in a certain number of cases and 
would thus more effectively offset injury (in particular injury caused by distortions, which is 
often not fully captured in the injury margin calculation). It would also help avoiding injury 
caused by trade deflection from other third countries, which do not apply the lesser duty rule 
and thus impose higher duties.  

81 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
The analysis of the potential economic and social impact of the non-application of the LDR 
in cases involving China is based on the same scenario as for the first element of option 3 (i.e. 
recalculation  of  the  dumping  margins  that  would  have  been  achieved,  when  using  an 
alternative  methodology).  For  the  purpose  of  this  analysis,  it  is  assumed  that  the  AD  duty 
would always be equal to the dumping margin, even if the injury margin is lower. This would 
lead  to  AD  duties  that  are  higher  than  those  under  the  current  methodology,  by  about  7.81 
percentage  points.  In  other  words  the  non-application  of  the  LDR  (in  addition  to  the  three 
elements of option 3) leads to a real increase in duty levels. 

While lower AD duties are likely to result in negative effects on jobs, it would be difficult to 
sustain  the  assumption  that  higher  AD  duties  would  allow  to  create  new  jobs.  However,  in 
order to compare the results of the analysis of the non-application of the LDR with the results 
of options 2 and 3, the same analytical approach was followed. 

On this basis, and for illustrative purposes, the effects of the non-application of the LDR are 
presented in table 7 at the aggregate level and at the MS level for the upper bound effects in 
table 8.  

Table  7:  Illustrative  range  of  the  number  of  potential  additionally  protected  jobs  as  a 
result  of  a  change  in  method  towards  a  new  methodology:  cost  adjustment  combined 
with a removal of the LDR, in all cases involving China, long-run 

Direct effects  

Indirect upstream effects 

Indirect downstream effects 

Total effect  

Lower bound 
+30,700 

Upper bound 
+45,700 

+9,600 

-10,400 

+29,800 

+14,200 

-10,400 

+49,500 

Source:  Assessment  of  the  economic  impact  of  changing  the  methodology  for  calculating  normal  value  in  trade  defence 
investigations against China. 21 December 2015 

82 

 
 
 
 
 
 
 
 
 
 
 
Table 8: illustrative upper-bound, long-run estimates of potential additionally protected 
jobs  by  EU  MS  as  a  result  of  a  change  in  method  towards  a  new  methodology:  cost 
adjustment combined with a removal of the LDR, in all cases involving China   

Austria 
Belgium 
Bulgaria 
Cyprus 
Czech Rep. 
Germany 
Denmark 
Greece 
Spain 
Estonia 
Finland 
France 
United Kingdom 
Hungary 
Ireland 
Italy 
Lithuania 
Luxemburg 
Latvia 
Malta 
Netherlands 
Poland 
Portugal 
Romania 
Slovakia 
Slovenia 
Sweden 
Total 
Source: Consultants' simulations, Eurostat [lfsi_grt_a], own calculations. 

Indirect 
upstream 
Effect 
 292 
 210 
 246 
 14 
 532 
2 675 
 125 
 255 
 913 
 50 
 150 
1 281 
1 111 
 333 
 91 
1 662 
 96 
 7 
 64 
 8 
 301 
1 762 
 301 
1 192 
 219 
 101 
 216 
14 206 

Direct 
Effect 
 909 
 728 
 688 
 36 
1 842 
10 850 
 428 
 438 
3 002 
 132 
 495 
4 436 
3 965 
1 090 
 270 
6 109 
 236 
 17 
 150 
 28 
1 019 
4 292 
 931 
1 921 
 703 
 281 
 731 
45 729 

Indirect 
downstream 
Effect 
- 213 
- 169 
- 137 
- 8 
- 454 
-2 665 
- 96 
- 108 
- 637 
- 27 
- 104 
- 992 
- 863 
- 284 
- 64 
-1 220 
- 42 
- 4 
- 26 
- 6 
- 208 
- 931 
- 173 
- 568 
- 182 
- 73 
- 169 
-10 420 

Total effect 
 988 
 769 
 798 
 43 
1 921 
10 860 
 457 
 586 
3 278 
 155 
 541 
4 725 
4 213 
1 138 
 298 
6 551 
 291 
 20 
 188 
 30 
1 111 
5 124 
1 059 
2 545 
 740 
 310 
 778 
49 515 

in % of total 
employment 
0.02% 
0.02% 
0.02% 
0.01% 
0.04% 
0.03% 
0.02% 
0.01% 
0.02% 
0.03% 
0.02% 
0.02% 
0.01% 
0.03% 
0.02% 
0.03% 
0.02% 
0.01% 
0.02% 
0.02% 
0.01% 
0.03% 
0.02% 
0.03% 
0.03% 
0.03% 
0.02% 
0.02% 

A  rough  approximation  of  the  results  to  Croatia  yields  about  400  jobs  potentially  protected 
additionally, including the LDR element. 

83