From 2017, more than three million jobs in the European Union and around 50 anti-dumping legal cases are at risk if the bloc grants new trade rights to China, a new study says, prompting a major backlash from both industry and trade unions.
As December of 2016 approaches,a date when China will obtain the status of “market economy” to the World Trade Organization (WTO), concerns are growing about the consequences of such a change on the employment in Europe and the United States. A report published on Friday by the Economic Policy Institute (EPI), a Washington-based institute, states that 3,5 million jobs will probably be destroyed in Europe between 2017 and 2020, which is 1,8 % of the total.
The European Union, along with other World Trade Organization (WTO) members, needs to determine whether to accord China “market economy status” (MES) at the end of 2016.
Will European SMEs (Small and Medium-Sized Enterprises) be the First Victims?
Taking into consideration this context, after 2016, the EU could not put so easily to its anti-dumping measures against China. The first victims will be, of course,the European SMEs which are more sensitive to the competition, according to the study.
According to the study’s authors, this would put the majority of jobs in seven manufacturing industries in danger in Europe: auto parts, paper, steel, ceramics, glass, aluminium and bicycles. Overall unemployment rates — already hovering at around 10 percent on average across Europe — could rise by 1 percent, the report claims.
The report, forecasts that EU imports of manufactured goods would rise by between 25 and 50 percent over the next three years.
MES status is important for China because, if granted, it reduces the EU’s ability to impose anti-dumping tariffs on Chinese imports. This could only happen if Chinese export prices were beneath already low domestic prices.
Opponents, such as Aegis Europe, a grouping of 25 European industry federations from steel to ceramics, say that Chinese prices are not the result of normal market forces but are artificially depressed.
According to our analysis, an EU decision to unilaterally grant MES to China would put between 1.7 million and 3.5 million EU jobs at risk by curbing the ability to impose tariffs on dumped goods and thus allowing Chinese companies to undercut domestic production by flooding the EU with cheap goods.
In brief, this study finds that granting MES to China would affect the EU in the following ways:
- Increase EU imports of manufactured commodities by between €71.3 billion and €142.5 billion, or more.
The growth of imports would increase EU trade deficits, reducing EU GDP by between €114.1 billion and €228.0 billion (1.0 percent to 2.0 percent of GDP) in the first three to five years after MES is granted, and eliminate 1,745,400 to 3,490,900 EU jobs (0.9 percent to 1.8 percent of total EU employment).
- Put 478,600 to 957,300 jobs directly at risk due to increased imports from China;
an additional 537,100 to 1,074,100 jobs indirectly at risk in supplier industries, including manufacturing, commodity, and service industries; and, through the loss of wages supported by these direct and indirect jobs, potentially eliminate an additional 729,800 to 1,459,700 respending jobs throughout the EU economy. These totals could increase due to the threat of increased imports in import-sensitive industries, discussed below.
- Potentially eliminate between 779,300 and 1,558,700 jobs in manufacturing (2.4 percent to 4.8 percent of total manufacturing employment), representing the largest number of jobs at risk of any major industry.
Within manufacturing, the largest potential losses would be in textiles and apparel, with 187,000 to 374,000 jobs at risk—7.8 percent to 15.5 percent of total employment in textiles and apparel.
- Place large numbers of jobs at risk in industries outside of manufacturing, including wholesale and retail trade (252,600 to 505,300 jobs, or 0.9 percent to 1.7 percent of total industry employment); and public, social, and related services (225,000 to 450,000 jobs, or 0.3 percent to 0.6 percent of total industry employment).
Create the biggest number of potential job losses in the four largest EU economies. Germany has the largest number of jobs at risk (319,700 to 639,200 jobs), followed by Italy (208,100 to 416,200 jobs), the United Kingdom (193,400 to 386,800 jobs), and France (183,300 to 366,800 jobs).
- Have the biggest impact, in terms of the number of jobs at risk as a share of total employment, in the 10 countries in Central Europe.
The top 10 hardest hit when ranked by jobs at risk as a share of total employment are led by Bulgaria (1.3 percent to 2.7 percent of total jobs), Romania (1.2 percent to 2.5 percent of total jobs), and Hungary (1.1 percent to 2.2 percent of total jobs). However, most of those countries are relatively small and have relatively few total jobs at risk. The largest countries in this group are Poland (where the 145,100 to 290,100 jobs at risk constitute 1.0 to 1.9 percent of total employment), Romania (100,100 to 200,100 jobs at risk constituting 1.2 percent to 2.5 percent of jobs), and the Czech Republic (46,900 to 93,900 jobs at risk, constituting 1.0 percent to 2.0 percent of total employment).
- Put an additional 2.7 million workers in a handful of highly vulnerable industries also directly at risk.
The list of vulnerable industries includes motor vehicle parts (1.2 million jobs at risk), paper and paper products (647,000 jobs at risk), steel (350,000 jobs at risk), ceramics (338,000 jobs at risk), glass (100,000 jobs at risk), aluminum (80,000 jobs at risk), bicycles and parts (28,000 jobs at risk), and additional jobs in other industries such as chemicals and solar cells, which are at risk due to excess capacity and production in China.
Source: Economic Policy Institute, FT.com
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Ronis Sofroniou is the author of Eyes on Europe & the Middle East and was born in Limassol, Cyprus, and studied Human Resources Management and French Language at Montpellier 3 University (2007) and granted with a Master’s degree in Oil and Gas Management from Abertay Dundee University in 2014. He worked at the Cypriot Embassy in Paris in 2009 and just after as a B2B salesman person in the smartphones market for some years. Currently he curries out a research study about Forex Companies Scams and Frauds in Cyprus. He lives between France and Cyprus where he works as an interpreter and French teacher.