Keep vigilant about EU's ratcheted-up protectionism tendency

Keep vigilant about EU's ratcheted-up  protectionism tendency


BRUSSELS: Shortly after slapping provisional import duties as much as 28.5 percent to Chinese steel, the European Union (EU) on Friday decided to launch an anti-dumping investigation into truck and bus tires imported from China. The decision and the timing of the announcement, together with previous trade remedy measures, picture EU's ratcheted-up protectionism tendency.

If history offers any guide, abusing self-indulgent trade remedy measure has never been a silver bullet for disagreement in bilateral trade. Rather, it has been repeatedly proved to be a double-edged blade.

As of 2016, EU has been China's largest trading partner in succession for 12 years, while China has ranked as EU's second largest trading partner for 13 consecutive years. But their economic relations are sometimes disturbed by EU's shrill announcements of anti-dumping measures against imports from China.

Those increasing trade remedy measures are harmful particularly in three ways.

Take Friday's anti-dumping investigation against China's tires as an example. Those measures often lack sufficient evidence, as the tire industry has been highly-internationalized and similarities among its major markets are quickly growing.

Data from the Chinese side shows that amount of Chinese tires exported to Europe has remained stable in the last two years, and the slightly lower price is mainly attributed to the price decline of global bulk commodity.

Against this backdrop, the possibility for EU to flow Washington's suit and shoot on its own foot is high. In February, the United States terminated its anti-dumping investigation against bus and truck tires from China as no damage to US industry was found.

Meanwhile, abusing anti-dumping measure is a poisoned chalice to EU, as the lingering illness of its steel industry is resulting from high cost in energy, environment and labor, which weakens EU companies' competitiveness in the global steel market.

Besides, over-capacity is a global issue and should be attributed to the downturn of the global economy and the declining demand. In fact, China's effort to cut steel overcapacities at home has been underestimated. China plans to reduce steel capacity by 100 million to 150 million tons in 2016-2020. In 2016, more than 65 million tons of steel production capacity was phased out, beating the annual target. As of the end of May this year, 42.39 million tons of capacity had been slashed, accounting for 84.8 percent of the annual goal.

By slapping anti-dumping duties and launching investigations against Chinese imports, the EU is scapegoating China for its own flaws and the global market.

In addition, very coin has two sides. Chinese and European tire firms have enjoyed close cooperation, and the EU-initiated probe will not only undermine the interests of Chinese enterprises, but also affect the development of the EU tire industry and the benefits of its own consumer.

As the world's two largest economy, China and EU should work together closely to firmly maintain and develop an open global economy, and jointly resist the "anti globalization" trend. That not only conforms to the common interests of both sides, but also to their stabilizer role in the international community.

European politicians know well the fact that the success of China-EU relations lies in building bridges, not walls. 

 

 

Published in Daily Times, August 13th 2017.