Insisting on the necessity of a full and formal impact assessment of a possible grant of market economy status to China

The social impact of granting MES in terms of EU jobs lost is very substantial whatever the economic methodology used to calculate them. The Commission believes that the only jobs at risk are those direct jobs related to the specific products covered by anti-dumping duties in force, i.e. around 250 000 jobs. Moreover, they further contend that the importance of anti-dumping measures can be gauged by the very small volume of imports from China which is subject to these duties, i.e. 1.38% of total imports from China. Both premises are wrong. It is important to calculate both the direct and indirect (upstream and downstream) job impact, as well as the deterrence effect of maintaining an effective anti-dumping instrument (which would be lost if MES were granted).

In terms of indirect jobs affected, most industries estimate that there are 3-4 indirect jobs lost for every direct job that disappears. This immediately places the total number of jobs in imminent danger, if MES is granted, at levels exceeding one million, just with regard to jobs tied to the specific products currently under measures. And, this is without taking any account of the clear deterrence effect of effective anti-dumping rules, with exporters knowing that injurious dumping could be met with anti-dumping measures that reduce their export volumes substantially.

In this context, an additional economic impact, the negative effects of granting MES on future EU industry investments, in particular in the growing area of "smart manufacturing‚ÄĚ, also needs to be assessed.

There would also be other consequences of granting MES. The environmental impact of granting MES is also hugely significant. Chinese manufacturing (which is 80% based on coal) is much more detrimental to the environment than EU production (28% based on coal). Does it make sense to replace the much cleaner European domestic production by Chinese coal based imports? A striking example is that the replacement of European domestic steel production by Chinese steel imports effectively raises carbon emissions by around 43%. The same effect applies to the aluminium industry and others.

The political impact of the decision on MES is also significant. Some argue that the Bilateral Investment Treaty (BIT) negotiations with China could be negatively affected by not granting MES, while others also argue that TTIP could be negatively affected and used by China to make the EU the ‚ÄúTrojan horse‚ÄĚ for exporting their dumped exports to the United States. These issues need to be fully analysed.

Unilateral EU action could jeopardise EU-US TTIP negotiations TTIP creates loop-hole for China to redirect dumped goods to the US market