European stakeholders increasingly reluctant as China’s MES deadline approaches

China-EU trade looked like this in 2010

Divisions might arise everywhere in the European Union (EU) as december 2016 approaches, and with it the need of solving the thorny question of granting (or not) market economy status (MES) to China 15 years after it became a member of World Trade Organisation (WTO). At that time, the accession protocol of the Asian country included some special methods to calculate dumping, whose future must be settled by the last month of this year. These tensions have grown not only between states, with the northern ones exposing their willingness accept such a status and those more involved in competition with China -Italy, for instance- showing their strong opposition, but also among other actors such as European businesses, some of which have already voiced their concern about the consequences of the WTO this could entail.

Among other effects, China gaining MES status would substantially restrain the margin of the European Union to launch anti-dumping procedures against Chinese businesses. Some European industries, increasingly jeopardized by competitors, fear that such a limitation on EU’s trade policy could entail very important job losses, as Borderlex.eu informs.

If a coordinated EU response should not be expected before several months, internal negotiations have already begun in order to achieve a unified position, which might be determined not only by that internal inter-state equilibrium, but also by the need to handle relations with the United States of America and China itself, with which bilateral trade and investment treaties are been negotiated.

The discussions engaged by the Commission with both the European Parliament and the Council in order to asses how anti-dumping investigations should evolve after december 2016 must be placed in this context.

Japanese beverages flying from Europe to Colombia? A new WTO case concerning national treatment

As this post from the International Centre for Trade and Sustainable Development has pointed out some days ago, the European Union (EU) filed a World Trade Organization (WTO) challenge against Colombia in the beginning of January. According to the European Commission’s presse release, European businesses of spirits could be facing an infringement of the WTO’s national treatment provisions, which hold that no taxes or regulations shall be imposed to the commercialisation of foreign products as long as local products are not equally subject to them.

The EU argues that Colombia’s additional tax on beverages whose alcohol dose exceeds 35 percent is directly related to the fact that Colombian-made spirits are usually below that threshold,

World Trade Organisation’s headquarters in Geneva, Switzerland.

whereas imported European beverages tend to have higher levels of alcohol. Therefore, a regulation which would seem neutral prima facie would entail a indirect discrimination against imported products, in outright violation of WTO law.

Even though the consultations request of the EU leads to negotiations which must last no less than 60 days, wasn’t the dispute to be settled through this amicable way, the WTO’s Dispute Settlement Body’s (DSB) case-law would prove essential in trying to work out the dispute’s result.

In this sense, the 1998 “Japan – Taxes on Alcoholic Beverages” case must be very much taken into account in order to predict a possible outcome. At that time, the DSB condemned Japan’s practices consisting in taxing imported whisky and cognac stronger that the local Shochu drink. To understand the DSB’s ruling, it must be stressed that the national treatment principle forbids any discriminatory treatment not only against identical imported products but also against those which are substitutable in the analysed market. In the present case, the EU precisely holds that Colombia’s practices lead to “unjustified imposition of a higher fiscal burden on like or directly competitive and substitutable imported spirits than the one applied on domestically produced spirits“.

Notwithstanding that some of the present case’s details could calle for a more nuanced approach, the DSB’s 1998 decision could anyway prove decisive to the EU-Colombia dispute’s outcome.