Sixteen Chinese chemical fiber cloth producers have won market economy status (MES) recognition from the EU, 28 firms' requests were denied and another 12 are awaiting a decision after attending a meeting on December 20.

Having MES should work in producers' favor when the EU considers whether dumping is taking place. It means they will compare the market price in EU with production costs in China, rather than those in a third surrogate country. It could also help to avoid dumping investigations in Japan and the US.

Whether anti-dumping taxes are imposed depends on the demonstration that producers are dumping goods on the EU market. If they are, the rates of taxes will be calculated according to the level of perceived damage to the EU's textile sector. The first verdicts on these are expected in March.

Wang Tao, of the China Chamber of Commerce for Import & Export of Textiles, said, "Our enterprises do operate in the way of the market economy, so should be granted MES."

Wang believes that the other producers involved also deserve MES, saying that the EU's requests for auditors on the spot during last October's inspections were beyond the reach of small enterprises.

Twenty-seven businesses from Shaoxing City, Zhejiang Province are involved, but only seven of them got MES recognition.

A local commercial official said that once punitive tariffs are imposed on those who failed, they would be driven out of the EU market, so were planning to transfer their attention to the Middle East, Africa or South America.

Wang denies any connection between Chinese products and damage to EU textile industries, saying that this is mainly due to appreciation of the euro and the EU's market strategy adjustment.

The EU is the largest export destination of Chinese chemical fiber cloth. Annual exports are worth hundreds of millions of US dollars. On June 17, the EU formally announced the start of its investigation into allegations of dumping chemical fiber cloth made in China.

(China.org.cn by Tang Fuchun February 3, 2005)