The World Trade Organization (WTO) has set up a panel to examine the so-called "surrogate country" approach used by the European Union (EU) to calculate anti-dumping measures applied to Chinese exports, following a request from Beijing, AFP news agency reports.

A "surrogate country" system judges the price of Chinese goods against a third country's to determine whether China is selling its products below market prices.

When China joined the WTO in 2001, it was agreed that other member states could treat it as a non-market economy for 15 years.

The surrogate country approach expired on December 11, 2016, and in a statement the next day, the Chinese Ministry of Commerce called on all WTO members to live up to their international obligations and abandon the surrogate country approach when calculating anti-dumping measures against Chinese exports.

As the EU failed to do so however, Beijing called on the WTO in March to set up the special panel. It also complained of the bloc's "obvious and egregious WTO-inconsistency of its measures." 

In a statement to the WTO’s Dispute Settlement Body (DSB), EU representatives responded that the bloc was debating whether or not to change its categorization of China, and this might lead to its repeal of the “surrogate country” approach.

At the same time, they argued that China’s request for an expert panel to investigate trade discrimination by the EU would interfere with the EU’s internal legislative process and should be a serious concern for WTO members.

During a DSB meeting on Monday, Chinese representatives refuted the EU statement, arguing the bloc failed to ensure compliance with the rules despite knowing the expiry date for 15 years. 

China asked the WTO to establish a panel of experts on March 9 and the DSB first considered its request at a meeting on March 21, but the EU opposed China’s motion.

According to WTO rules, while other parties may object to an initial request, a panel will be set up regardless of any objections if a second request is made.

WTO's panels of independent trade and legal experts usually take several months to render their decisions.