Li calls on EU to drop Surrogate Country approach

Updated: 2016-07-22 07:34

By Xinhua in Ulaanbaatar and Fu Jing in Brussels(China Daily Europe)

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Premier Li Keqiang has called on the European Union to fulfill its obligation to drop the Surrogate Country approach from its anti-dumping measures against Chinese exports.

He said China hopes the bloc will act in accordance with article 15 of the Protocol on the Accession of China to the World Trade Organization.

"China and the EU are each other's major trade partners," he said in a meeting with German Chancellor Angela Merkel on the sidelines of the 11th Asia-Europe Meeting summit on July 16 in Ulaanbaatar, capital of Mongolia. "Article 15 is a matter of confidence for companies and the market in the rule of law, international rules and China-EU trade relations. It's hoped Germany can actively help solve the issue."

 Li calls on EU to drop Surrogate Country approach

Premier Li Keqiang and German Chancellor Angela Merkel chat after heads of delegations posed for a photo during the Asia-Europe Meeting summit in Ulaanbaatar on July 15. Provided to China Daily

According to a 2007 report to the US Congress, the Surrogate Country approach has been used since the 1960s to apply anti-dumping measures to nonmarket economies. Under the approach, comparable prices and costs from similarly situated third countries are substituted for nonmarket economies to determine fair market value.

According to article 15 of the protocol signed when China joined the WTO in 2001, the approach should not be used from Dec 11, 2016.

However, there are voices in Europe that China has yet to meet the standard set by the EU for market economy status, and that the EU should continue with its use of a nonstandard approach in anti-dumping investigations against China.

Within the EU, Britain, the Netherlands and some Nordic countries support China gaining market economy status. Germany is supportive in principle but wants safeguards for sensitive industries, while Italy is opposed. Meanwhile, China is recognized as a market economy by dozens of non-EU nations including Brazil, New Zealand, Switzerland, Iceland, Australia and Russia.

Weeks ago, the European Parliament voted to refuse China market economy status, with members arguing that the country has not met the five criteria set out by European institutions.

Beijing maintains that granting the status is dependent on international rules, not respecting domestic criteria.

Luigi Gambardella, president of ChinaEU, a nonprofit organization in Brussels that promotes bilateral digital and internet cooperation, says to deny China market economy status would be a strong political signal from the EU that could deteriorate the recent warming political relationship between the economies.

In the short term, he says, there are concrete risks of retaliation from China, causing EU economies serious pain and uncertainty.

"Closing the door to China may have very negative effects," he warned in an earlier interview.

On China-Germany ties, Premier Li said on July 16 that his nation is willing to work with Germany to ensure the implementation of agreements reached last month during the fourth round of intergovernmental consultations.

China is ready to improve coordination with Germany over international and regional affairs, and jointly push forward bilateral ties and cooperation, the premier said.

Speaking on the recent terrorist attack in Nice, France, and Britain's planned exit from the EU, which has dealt a blow to global financial stability, Li said these issues indicate that the Eurasia continent is faced with several challenges.

"China is opposed to terrorism in any form," he said. "China firmly supports the EU and European integration, and holds that a stable and prosperous Europe serves the interests of all parties."

He added that China "believes the EU's development will not be arrested".

On Britain-EU ties, Li voiced hope for a smooth and transparent transition, so as to meet the external expectations for stability.

"We're wiling to enhance coordination with all parties concerned to manage risks, boost confidence, keep international capital markets stable, and speed up world economic recovery and growth," the premier said.

Merkel responded by saying that her frequent meetings with Li testified to the intimacy in her nation's ties with China and that Germany is willing to keep China up to date with the latest developments in Europe.

The chancellor urged the international community to properly deal with the fallout of Britain's exit from the EU and to work together in fighting terrorism.

China is a trustworthy and reliable partner, she said, adding that Germany is pleased to see the EU cooperating with China in a sensible and practical manner.

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(China Daily European Weekly 07/22/2016 page7)