The European Commission has formally adopted a regulation addressing significant trade distortions in China’s lysine sector. This decisive move comes after extensive investigations revealed the impact of Chinese government interventions, subsidies, and state-led market practices on fair competition within the EU’s lysine industry.
New Regulation Targets Trade Distortions
The newly adopted regulation marks a critical step in the EU’s efforts to safeguard its domestic industries against unfair trade practices. Specifically, it targets the lysine industry, an essential component in animal feed production, where Chinese exporters benefit from state-driven policies that artificially lower export prices.
Key Provisions of the Regulation
The regulation enables the EU to impose corrective measures, such as anti-dumping duties, on Chinese lysine imports found to benefit from distortions. These provisions aim to:
- Protect EU lysine producers from the financial impact of dumping.
- Restore fair market conditions by countering artificial price reductions.
- Encourage compliance with global trade norms.
Findings Behind the Regulation
The Commission’s investigation revealed that China’s lysine industry operates under significant government influence. These findings include:
- Extensive subsidies granted to lysine producers.
- Financial systems manipulated to provide preferential access to credit.
- Direct intervention by the Chinese Communist Party in enterprise management, including in nominally private firms.
These practices have allowed Chinese producers to export lysine to the EU at prices that undermine European manufacturers’ competitiveness.
Impact on EU Industries
The adoption of the regulation reflects the EU’s commitment to addressing the challenges faced by its lysine sector. European producers have reported declining revenues, reduced investments, and job losses due to the influx of unfairly priced imports from China. By levelling the playing field, the EU aims to mitigate these adverse effects and secure the industry’s long-term sustainability.
Next Steps for Enforcement
With the regulation now in force, the European Commission will monitor compliance and assess the effectiveness of trade defence measures. It is expected that anti-dumping duties will be implemented soon to counteract the effects of Chinese trade distortions.
