International credit ratings agency Fitch Rating has stated that it believes that the European Commission’s proposal that would allow it to ignore the lesser duty rule when setting antidumping tariffs on steel imports could materially reduce Chinese steel exports to the region. However, any impact may be negated if the EU grants China market economy status (MES), as this would effectively limit the level at which the EU could impose tariffs. The use of non-market-economy methodologies has generally led to higher antidumping duties in past trade investigations.
According to Fitch, duties would have to be recalculated and would probably fall significantly, if China is recognized as a market economy by the EU. Without MES, European authorities can calculate dumping margins based on market prices in third countries, which are generally higher than in the Chinese domestic market. But if MES is granted, the commission would be required to use the domestic market price in China.