EC sees fewer job losses than feared from easing China trade defenses

BRUSSELS: The European Commission has estimated far fewer jobs would be lost by relaxing trade defenses against China than opponents of the move predict, a document shows, suggesting EU officials are leaning toward accepting Beijing’s demands.

Easing the defenses without any mitigating measures would result in job losses ranging between 63,600 and 211,000, according to a Commission document sent to member states before a trade ministers’ meeting on Feb. 2 and seen by Reuters.

It added that mitigating measures might reduce that impact by at least half.

The figure is in sharp contrast to the employment impact of between 1.7 and 3.5 million jobs in a study commissioned by Aegis Europe, a grouping of industries opposed to easing trade defenses against China.

The European Union has to decide whether to recommend granting China “market economy status” by a Dec. 11 deadline, which Beijing says is its right 15 years after it joined the World Trade Organisation.

Market economy status would make it harder for Europe to impose anti-dumping duties on Chinese goods sold at knock-down prices, changing the criteria for determining a fair price.

A decision will be taken together with the EU’s 28 members and the European Parliament.

The Commission will discuss the matter again in July after receiving feedback.

The note from senior officials in the trade defense section of the Commission said the study for Aegis assumed decreased duties for all imports from China. However, products subject to anti-dumping duties are only applied on 1.38 percent of imports from China.

Aegis Europe said the Commission’s estimates were artificially low, overestimating gains from low-priced imports, failing to factor in the extra jobs that would go in service sectors for every manufacturing job lost and ignoring the deterrent effect the threat of anti-dumping duties had on all Chinese producers.

“It’s an unlimited license to dump, destroying millions of jobs in sectors like steel, automotive, energy technology, tools and chemicals,” said Aegis spokesman Milan Nitzschke.

The group wants the Commission to conduct a full impact assessment, including a broad and public

China’s trade surplus with the European Union in goods was 137 billion euros ($150 billion) in 2014.

The steel industry in particular has opposed any loosening of trade barriers against China, the EU sector lodging successive complaints over dumping – selling at below domestic market prices or below the cost of production.

Free trade advocates say Europeans benefit from cheaper Chinese imports and that companies such as Alstom or Siemens will gain easier access to China’s vast market in return. Rebuffing Beijing also risks retaliation.

The Foreign Trade Association, which represents retailers and importers, said imports of Chinese consumer goods were already so high that it did not expect a surge if trade defenses were relaxed.

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