China urged on Thursday the European Union to respect World Trade Organization rules and said new EU legislation is likely to be used for trade protection, according to the Ministry of Commerce.

The ministry's comment came after the European Parliament approved legislation on Wednesday designed to protect EU industries from imports by using so-called market distortions as a tool.

The new legislation will allow the EU to use costs in a third country to determine whether there is dumping of Chinese exports. The legislation can also launch probes to investigate labor and environmental standards when setting import duties. It is expected to become effective before year's end.

China has repeatedly urged the EU to drop the proposed use of the criteria in calculating dumping, which may not recognize the full market economy status granted to China by nearly 100 countries.

The ministry said the move would cause severe damage to the WTO's anti-dumping legal system and urged the EU to respect international trade rules.

"The new EU anti-dumping investigation method lacks a basis under WTO regulations," the ministry said. "The Chinese government will adopt necessary measures to ensure the legal rights and interests of Chinese manufacturers and reserve relevant rights under the World Trade Organization's dispute settlement mechanism."

Ma Yu, a senior researcher at the Chinese Academy of International Trade and Economic Cooperation in Beijing, said, "For China, having (market economy status) makes it harder for the EU or other economies to impose anti-dumping duties on Chinese goods sold at low prices under the WTO rules, because it changes the method for determining a fair price."

Ma said the EU is unwilling to offer the status to China because it does not want to see China's foreign trade become more flexible under the WTO framework.

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