About HKTDC | Media Room | Contact HKTDC | Wish List Wish List () | My HKTDC |
Save As PDF Email this page Print this page
Qzone

2.10 Trade Defence Measures

The EU may adopt trade defence remedies against dumped or subsidised imports from third countries leading to an increase in tariff duties. In addition, the EU may decide to protect its industry against a sudden increase in imports of a particular product by means of safeguard measures in the form of import quotas. Special safeguard mechanisms are also available against textile and clothing products as well as other specific products originating in the Chinese mainland. Traders may also request the EU to tackle certain trade barriers on third markets affecting their commercial interests through the so-called “Trade Barriers Regulation”.

2.10.1 Anti-dumping and Anti-subsidy Measures

In order to combat unfair trade practices which cause or threaten to cause material injury to the EU industry, following certain procedures the EU may increase the import duties on imports of specific products from certain countries for which dumping or subsidisation is found.

a) Anti-dumping

Council Regulation 1225/2009, as amended, provides the main legal basis for the EU’s anti-dumping measures. According to this Regulation, anti‑dumping duties are to be imposed if three conditions are met: (i) a finding of dumping;[38] (ii) a determination of material injury (or threat thereof) to EU industry;[39] and (iii) the adoption of measures is in the interest of the EU as a whole.[40]

The European Commission is responsible for investigating complaints and assessing whether they are justified. It can also impose provisional measures. However, definitive measures can only be imposed by the Council.

i) Initiation of the Investigation

Proceedings for an investigation can be initiated by written request from the EU industry or from an EU Member State. Any natural or legal person, or any association not having legal personality, acting on behalf of the EU industry (i.e. representing at least 25% of EU total production of the product concerned), may submit a written complaint to the European Commission (or to any EU Member State). If the complaint contains sufficient “prima facie” evidence of dumping and material injury, the European Commission will initiate an anti-dumping proceeding. Once it has received the complaint, the European Commission has 45 days to decide whether to initiate an investigation or reject the complaint.

ii) Main Steps of the Investigation

The investigation is carried out by the European Commission (Directorate-General for Trade). In cases involving the Chinese mainland, the European Commission will identify an analogue country with similar conditions which will be taken into account in order to determine the normal value of the products concerned. Regardless of this, exporters have the opportunity to claim market economy status (MES) if they can demonstrate that they operate under market economy conditions and are free from significant State interference. If a claim for market economy status is accepted, the normal value will be calculated on the basis of the cost information provided by the exporter. If the claim for market economy status is rejected, the exporters may still claim that they are free from State interference with respect to export prices, and request individual treatment (IT) in the calculation of anti-dumping duties.

From the date of publication of the notice of initiation in the Official Journal, Chinese exporters have 10 days to comment on the analogue country selected; 15-21 days to send in the market economy status claim (where individual treatment may also be requested); 37 days to submit the questionnaire response containing detailed information about the company’s export activities in the EU; and 37 days to submit their views on injury to the EU industry. These time-limits may be extended.

In cases where an investigation involves a significant number of exporters, the European Commission may resort to sampling (i.e. the selection of representative companies on which to base the calculations of dumping). Exporters wishing to participate in the sample must submit information on their domestic and export sales as well as their production volume within 10-15 days after initiation.

A final determination on a claim for market economy status should be issued no later than three months after initiation. However, in practice, this time limit is seldom respected. Such claim may also be subject to an on-the-spot verification by the European Commission. Three or four months after initiation, Commission officials may carry out further verification visits at the exporters’ premises in the Chinese mainland, in order to ensure that any of the information submitted is accurate.

Selected Time Limits of EUs Anti-dumping Proceedings against Mainland-origin Products

From the date of publication of the notice of initiation in the Official Journal

Actions

Within 10 days

Exporters to comment on the analogue country selected by the Commission, whose information (e.g. market and cost data) will be used for calculation of dumping margin of the concerned products.

Within 15 days

Exporters to indicate their interest to be selected for sampling to the Commission and provide the information requested in the Notice of Initiation. 

Not later than 15 days

Interested parties not named in the anti-dumping complaint to make themselves known to the Commission and request questionnaires from the Commission.

Within 15-21 days

Exporters to send the ‘market economy status’ claim, and request for ‘individual treatment’.

Within 37 days from the date of notification of being included in the sample

Sampled exporters to submit duly completed questionnaire about their companies’ export activities in the EU to the Commission.

Not later than 9 months

The Commission may impose provisional anti-dumping duties.  

Within 15 months

The Commission must conclude the investigation. The Commission may terminate the proceeding without the imposition of anti-dumping duties; or impose definitive anti-dumping duties (through a Council Regulation); or conclude the investigation by accepting ‘price undertakings’ from exporters agreeing to revise their prices.

Note: The time limits are for reference only. Different anti-dumping investigations may have different time limits, which are specified in the relevant Notice of Initiation published in the Official Journal of the EU.

Source: Council Regulation 384/96 (OJ 1996 L56, as amended)

iii) Outcome of the Investigation

Nine months after initiation, the European Commission may impose provisional duties, if the existence of dumping and injury to the EU industry has been preliminarily established, as well as EU interest. The investigation must be concluded within 15 months from initiation. The European Commission may terminate the proceeding without the imposition of anti-dumping duties; or impose definitive anti-dumping duties (through a Council Regulation); or conclude the investigation by accepting undertakings from exporters agreeing to revise their prices. If duties are imposed, they will expire five years after their date of imposition or after the conclusion of the review of the measures concerned. The duties imposed are calculated according to the dumping or injury margin, whichever is lower.

iv) Undertakings

Hong Kong traders would be interested to know that, once it becomes clear that the investigation will lead to the imposition of duties, the companies concerned might want to consider price undertakings in order to avoid the imposition of such duties against their exports. Undertakings are a form of anti-dumping measure where an exporting producer undertakes to increase its export prices of the product concerned to the Community to non-dumped or non-injurious levels. Undertakings are negotiated with the Commission late in the anti-dumping investigation, when the duty rates have been calculated on the basis of the cooperating exporting producers’ dumping or injury margins. They can be negotiated with respect to both provisional and definitive duties.

The acceptance by the Commission of an undertaking leads to the non-application of provisional or definitive anti-dumping duties to the imports of the product concerned manufactured by the company benefiting from the undertaking. The Commission enjoys wide discretion in accepting or rejecting undertakings offered by exporting producers. As a general rule, the Commission will not accept undertakings from exporters which did not cooperate or did not sufficiently cooperate in the investigation, or which did not produce or export the product concerned during the period of investigation.

In light of the above, price undertakings would only be an option for companies which cooperated in the anti-dumping investigation and for which the Commission has found dumping. Each company will have to assess whether a price undertaking is a better solution than paying the duties.

v) Appeal

Individual cooperating exporters may challenge the definitive anti-dumping duties before the General Court and subsequently appeal to the European Court of Justice (ECJ) on points of law only. A WTO Member (including, of course, the Chinese mainland) may have recourse to the WTO dispute settlement system to discuss the conformity of the adopted measures with the WTO Anti-dumping Agreement.

EU’s Anti-dumping Measures against Mainland-origin Products
(Measures in Force as at
mid-March 2011)

Definitive Duties (51 cases)

Imposition Date

Product

Rate of Duty

Remarks

           1.           

7.10.2009

Aluminium foil

30.% (except for 3 companies, ranging from 6.4% to 24.2%

 

           2.           

29.10.2010

Aluminium road wheels

22.3%

 

           3.           

22.07.2005

Barium carbonate

56.4 euro/tonne (except for 2 companies for whom duties were 6.3 euro/tonne and 8.1 euro/tonne)

  • On 16 July 2010, the Commission initiated an expiry review concerning these measures.
           4.           

15.7.2000

Bicycles

48.5%

  • Duty maintained for another five years starting from 15.7.2005 consequent to an expiry review.
           5.           

15.5.2009

Candles (certain candles, tapers and the like)

549.33 euro per tonne of fuel

  • The rate of the definitive anti-dumping duty is a fixed amount of euro per tonne of fuel content (usually but not necessarily in the form of tallow, stearin, paraffin wax or other waxes, including the wick) of the products manufactured.
           6.           

17.6.2010

Cargo scanning systems

34%

 

           7.           

30.7.2005

Certain castings

47.8% (except for 10 companies (who obtained 0%) and 5 other companies ranging from 18.6% to 37.9%)

 

  • The undertaking which was accepted by Commission Decision 2006/109/EC was repealed on 15.7.2010.
  • An expiry reviewof the measures was initiated on 27.7.2010.
           8.           

22.6.2007

Saddles

29.6% (except for six companies ranging from 0% to 5.8%)

 

           9.           

15.9.2006

Chamois leather

58.9%

 

  1.          10.         

4.12.2008

Citric Acid

  • 42.7% (except for eight companies, ranging from 6.6% to 42,7%)
  • Companies that were granted a price undertaking were subject to measures of 0%.

 

         11.         

31.12.2008

Citrus fruit (namely mandarins)

  • 531.2 euro/tonne net weight (except for two companies for whom duties were 361.4 euro/tonne and 490.7 euro/tonne respectively)
  • Cooperating producers that were not selected in the sample are subject to a duty of 499.6 euro/tonne

 

 

         12.         

19.3.2008

Coke 80+

The difference between the minimum import price of EUR 197 per tonne and the net, free-at-Community-frontier price, before duty, in all cases where the latter is less than the minimum import price.

 

         13.         

10.5.2002

Coumarin

3,479 euro/tonne

  • Duties maintained for another five years starting from 30.4.2008.
  • Consequent to a circumvention investigation, AD duty extended, with effect from 31.12.2004, to imports of the same product consigned from India or Thailand, whether declared as originating in India or Thailand, or not.
  • Consequent to a circumvention investigation, AD duty has been extended, with effect from 11.11.2006, to imports of the same products consigned from Indonesia or Malaysia, whether declared as originating in Indonesia or Malaysia or not.
         14.         

19.2.2000

Dead-burned (sintered) magnesia

The difference between the minimum import price of 120 euro/ tonne and the net, free-at-Community frontier price, before duty.

 

Duties maintained for another five years starting from 6.5.2006.

 

         15.         

16.11.2007

Dicyandiamide (DCD)

49.1%

 

         16.         

29.2.2008

Ferro-silicon

31.2% (except for 15.6% and 29% for two companies)

 

         17.         

7.10.2006

Footwear with uppers of leather

16.5% (except for 9.7% for one company)

  • The measures were extended on 31.12.2009 for a period of two years.
  • On 30.4.2008 an anti-circumvention investigation extended the measures in force to the product concerned originating in Macao.
         18.         

22.1.1995

Furfuraldehyde

352 euro/tonne

  • Duty maintained for another five years starting from 29.4.2005 consequent to an expiry review.
  • On 27.4.2010, a new expiry review was initiated.
         19.         

1.11.2003

Furfuryl alcohol

250 euro/tonne (except for four companies ranging from 84 euro to 160 euro/tonne)

  • Duty maintained for another two years, starting from 11.12.2009
         20.         

22.7.2005

Hand pallet trucks and their essential parts

46.7% (except for four companies, ranging from 7.6% and 39.9%)

  • An anti-absorption investigation, to examine whether the anti-dumping measures have had an effect on resale prices or subsequent selling prices in the EU, was initiated on 31.3.2006 and terminated on 7.12.2006. It concluded that no absorption of the anti-dumping duties had occurred.
  • Partial interim review initiated on 7.8.2007 to establish whether highlifters, stackers, scissorlifts and weighing trucks (which could fall under the product scope) are distinct from the product concerned.
  • Partial interim review initiated on request from one producer on 19.12.2007 to establish whether the measure at its current level is still necessary to offset dumping and whether the applicant meets the criteria for market economy treatment.
         21.         

27.4.2007

Ironing boards

38.1% (except for 34.9%, 36.5% 26.5%, 18.1% and 35.8% for five companies)

 

         22.         

28.7.2006

Lever arch mechanisms

47.4% (except for 27.1% for one company)

 

         23.         

19.9.2001

Gas fuelled, non-refillable and certain refillable pocket flint lighters

EUR 0.065 per lighter

  • Duty extended and maintained for another five years starting from 13.12.2007 consequent to an expiry review. Pursuant to the extension, the duty currently applies to:

–   gas-fuelled, non-refillable pocket flint lighters

–   gas-fuelled, refillable pocket flint lighters, incorporating a plastic tank body

  • The duty does not apply to gas-fuelled, refillable pocket flint lighters, incorporating a plastic tank body, with a value per piece equal to or greater than EUR 0.15,.
         24.         

13.10.2005

Magnesia bricks

39.9% (except for six companies ranging from 2.7% and 27.7%)

  • Commission Decision 2005/704/EC accepting undertakings from certain companies and exempting such companies from the anti-dumping duties was repealed by  Decision 2007/440/EC, effective from 27.6.2007, due to breach of the undertakings.
  • On 8.10.2010 an expiry review was initiated.
         25.         

17.6.2010

Molybdenum wires

64.3%

 

         26.         

3.12.2008

Monosodium glutamate

39.7% (except for two companies which are subject to a duty of 33.8% and 36.5%)

 

         27.         

13.11.2004

Okoumé plywood

66.7% (except for four companies ranging from 6.5% to 23.5%)

An expiry review was initiated on 11 November 2009

         28.         

12.10.2007

Peroxodisulphates

71.8% (except for two companies which are subject to a duty of 24.5% and 0%)

 

         29.         

30.9.2006

Plastic sacks and bags

28.8% (except for duties ranging from 4.8% to 12.8% for eight companies)

 

         30.         

18.3.2005

Polyester staple fibres

49.7% (except for six companies, ranging from 4.9% to 26.3%)

An expiry review of the measures was launched on 16.5.2010.

         31.         

20.8.2004

Polyethylene terephthalate

184 euro/tonne (except for nine companies ranging from 0 euro to 184 euro/tonne)

Duties maintained for another five years starting from 18.11.2010 consequent to an expiry review.

         32.         

6.6.1996

Powdered activated carbon

323 euro/tonne

Duties maintained for another five years starting from 11.7.2008 consequent to an expiry review..

         33.         

14.5.2009

PSC wires and strands (certain pre-and post-stressing wires and wire strands of non-alloy steel)

46.2% (except for one company that is subject to a duty of 31.1%

 

         34.         

25.1.1997

Certain ring binder mechanisms

  • 17 and 23 rings: Amount by which the price falls below 325 euro per 1,000 pieces
  • Others: 78.8% (except for one company: 51.2%)
  • Duties maintained for another five years starting from 27.2.2010 consequent to an expiry review.
  • Consequent to a circumvention investigation, the AD duties have been extended, to imports of the same products consigned from Laos and Vietnam.
 
         35.         

7.10.2009

Seamless pipes and tubes, of iron or steel

39.2% (except for two companies that are subject to measures of 17.7% and 27.2%)

 

         36.         

6.12.2007

Silico-manganese

8.2%

 

         37.         

27.5.2000

Silicon carbide

52.6%

  • Duty maintained for another five years starting from 26.8.2006 consequent to an expiry review.

 

         38.         

27.7.1990

Silicon metal

19% (except for one company which is subject to 16.3%

  • Duty maintained for another five years starting from 30.5.2010.
  • Consequent to a circumvention investigation, the AD duties have been extended to imports of the same products consigned from Korea as of 20.1.2007.
         39.         

12.3.2004

Sodium cyclamate

0.26 euro/kg (except for three companies which are subject to duties ranging from 0 euro to 0.11 euro/kg.

Duty maintained for another five years starting from 9.6.2010

         40.         

29.10.2010

Sodium gluconate

53.2%

 

         41.         

20.11.2005

Stainless steel fasteners and parts thereof

27.4% (except for 11.4% and 12.2% for two companies)

An expiry review investigation was launched on 19.11.2010

         42.         

1.2.2009

Steel fasteners (certain iron and steel...)

85% (except for non-sampled cooperating exporting producers which are subject to a duty of 77.5% and eight other companies which are subject to duties ranging from 0% to 79.5%)

On 28.10.2010 an anti-circumvention investigation was initiated with respect to imports of the product concerned consigned from Malaysia.

         43.         

18.8.1999

Steel ropes & cables

60.4%

  • Consequent to an anti- circumvention investigation, the AD duty has been extended, with effect from 12.5.2010, to imports of the same products consigned from Korea, whether declared as originating in Korea or not.
  • An expiry review of the measures was launched on 13.11.2010.
         44.         

18.4.2007

Strawberries

  • Strawberries with added sugar/sweetening content of more than 13% by weight: 496.80 euro/tonne.
  • Strawberries with added sugar/sweetening content of less than or equal to 13% by weight: 566.30 euro/tonne.
  • Strawberries with no added sugar/sweetening content: 598 euro/tonne.
  • In cases where the customs declaration indicates a price different from the price actually paid (post-importation price), a fixed anti-dumping duty shall apply (unless the sum of such fixed duty and of the post-importation price is below the minimum import price). In these cases, the fixed anti-dumping duty is determined as follows:

–   In case of strawberries containing added sugar or other sweetening matter with a sugar content exceeding 13% by weight: 62.6 euro/tonne for one company and 169. euro/tonne for all other companies.

–   In case of strawberries containing added sugar or other sweetening matter with a sugar content not exceeding 13 % by weight: 71.3 euro/tonne for one company and 193.7 euro/tonne for all other companies.

–   In case of strawberries not containing added sugar or other sweetening matter: 75.3 euro/tonne for one company and 204.5 euro/tonne for all other companies.

 

 

         45.         

26.7.2002

Sulphanilic acid

33.7%

  • Original duty amended from 21.0% to 33.7% with effect from 13.2.2004 as a result of a re-investigation.
  • Duty maintained for another five years starting from 17.10.2008.

 

         46.         

28.1.2006

Tartaric acid

34.9% (except for 0%, 4.7% and 10.1% for three companies)

On 22.2.2008, a partial interim review excluded ‘D’ grade of the product concerned from the measure with retroactive effect.

         47.         

8.10.2005

Trichloroisocyanuric acid (TCCA)

42.6% (except for four companies ranging from 7.3% to 40.5%).

An expiry review investigation was initiated on 6.10.2010.

         48.         

4.4.1996

Tube or pipe fittings of iron or steel

58.6%

  • Duty maintained for another five years starting from 5.9.2009 consequent to an expiry review.

 

         49.         

14.3.2007

Tungsten electrodes

63.5% (except for three companies which are subject to duties ranging from 17% to 41%)

 

         50.         

20.12.2008

Welded tubes and pipes of iron or non-allow steel

90.6%

 

         51.         

6.8.2009

Wire rod

24% (except for one company that is subject to a duty of 7.9%)

 

Anti-dumping Investigations Underway (10 cases, taking into consideration only new anti-dumping investigations) as at mid-March 2011

Date of Initiation of
Anti-dumping Proceedings

Product

        1.         

17.12.2009

Glass fibre products (certain continuous filament)

        2.         

17.2.2010

Melamine

        3.         

18.2.2010

Coated fine paper

        4.         

20.5.2010

Glass fibres (certain open mesh fabrics)

        5.         

19.6.2010

Ceramic tiles

        6.         

23.7.2010

Tris (2-chloro-1-methylethyl) phosphate (TCPP)

        7.         

30.9.2010

Stainless steel seamless pipes and tubes

        8.         

17.12.2010

Graphite electrode systems (certain)

        9.         

26.1.2011

Oxalic acid

       10.       

17.2.2011

Sodium cyclamate

Remark: Anti-dumping duty is levied on the basis of CIF price before duty.

Source: Official Journal of the European Union

b) Anti-subsidy

Council Regulation 597/2009 on protection against subsidised imports, as amended, provides the main legal framework governing the EU’s countervailing measures. Apart from the provisions on the definitions and calculation of subsidies,[41] this Regulation is similar to that on anti-dumping, particularly with regard to the determination of injury, the definition of EU industry, initiation procedures, imposition of provisional and definitive measures, and termination of proceedings.

The three conditions to be satisfied before the imposition of a countervailing measure are that: (i) the subsidy must be specific (i.e. an export subsidy, or a subsidy limited to a company, an industry or a group of companies or industries); (ii) a material injury to EU industry must exist; and (iii) the interest of the EU must be taken into account.

The amount of the countervailing duties is established in accordance with the subsidisation or injury margin, whichever is lower. The margin of subsidisation is calculated in terms of the benefit conferred on the subsidised products, whereas the injury margin is set at a level necessary to remove the injury.

New Anti-dumping and Anti-subsidy Investigations by the EU[42]

 

2003

2004

2005

2006

2007

2008

2009

2010

2011

New anti-dumping and anti-subsidy investigations, of which:

8

29

26

36

9

20

21

18

4

against Chinese mainland-origin products

3

9

8

12

6

6

7

10

2

against India-origin products

2

0

1

2

0

0

2

3

1

against Russia-origin products

0

3

1

2

1

0

0

0

0

against Hong Kong-origin products

0

0

2

0

0

0

0

0

0

New Anti-dumping and Anti-subsidy Investigations by the EU
by Product Sectors

Product

2003

2004

2005

2006

2007

2008

2009

2010

2011

Iron and Steel

0

13

4

0

6

6

4

3

0

Chemical and allied products

3

8

3

13

2

2

9

7

4

Textiles and allied products

2

4

1

2

0

0

3

0

0

Other mechanical engineering items

0

2

2

2

0

0

0

1

0

Wood and paper

1

0

0

0

0

0

0

2

0

Electronics

2

0

7

5

0

0

1

2

0

Others

0

2

9

14

1

1

4

3

0

Total new investigations

8

29

26

36

9

20

21

18

4

(anti-dumping investigations)

(7)

(29)

(24)

(35)

(9)

(18)

(15)

(15)

3

(anti-subsidy investigations)

(1)

(0)

(2)

(1)

(0)

(2)

(6)

(3)

1

2.10.2 Safeguards

In general terms, safeguard measures can be adopted in those cases where there is a sudden increase in imports of a particular product into the EU causing or threatening to cause serious injury to the EU industry. Council Regulation 260/2009 on the common rules for imports sets out the provisions for the adoption of safeguard measures by the EU[43]. Measures adopted through this Regulation normally adopt the form of an import quota imposing limits on the importation of the product concerned regardless of its origin (erga omnes). However, as described below, the EU may have recourse to specific safeguard mechanisms against imports from the Chinese mainland.

a) Initiation of a Safeguard Investigation

For any safeguard action, including the specific instruments with respect to the Chinese mainland, the EU industry (one or more EU-based companies) cannot send the petition to the European Commission directly. Instead, a Member State must make a request to the European Commission for action to be taken, or the European Commission can initiate an action on its own initiative. An industry may of course channel a complaint for action through the Member State or States in which it is located. Once a request is made by the Member State, the European Commission will handle the complaint.

Under Regulation 260/2009, before a safeguard measure is applied to particular products, the European Commission must find “serious injury”. The investigation must examine the trend of imports and serious injury or threat thereof, in relation to factors including the volume of imports, the price of imports, and the consequent impact on EU producers as indicated by trends in certain economic factors such as production, capacity utilisation, stocks, sales, market share, profits and employment.

b) Outcome of the Investigation

Under Regulation 260/2009, provisional safeguard measures may be adopted by the European Commission alone, in critical circumstances, for up to 200 days. These measures should be in the form of increased customs duties. Definitive safeguard measures can be adopted (increased customs duties and/or quotas) either by the European Commission or by a qualified majority of the Council. If the measure is adopted by the European Commission, the Council has the power to confirm, amend or revoke the safeguard measure. Any measures, if adopted, would have to apply to imports from all third countries, except developing countries whose imports are below a certain threshold. The duration of any of the measures should not exceed four years, but may be extended for four more years.

If the safeguard measure leads to the establishment of a quota, account is taken of the need to maintain traditional trade flows and the volume of goods exported under contracts concluded on normal terms and conditions before the entry into force of the safeguard measure. In general, the quota is not to be lower than the average level of imports over the last three representative years for which statistics are available.

c) Safeguard against Specific Products from the Chinese Mainland

As regards the specific case of products originating in the Chinese mainland, Hong Kong traders should be aware that the EU can impose safeguard measures against any products from the Chinese mainland by using the general safeguard instrument described above or another specific safeguard instrument. This instrument was adopted in 2003 pursuant to the Chinese mainland’s Protocol of Accession to the WTO and therefore only applies to Chinese mainland-origin imports. The additional instrument is Regulation 427/2003 on a transitional product-specific safeguard mechanism (the “TPSSM”)[44].

The TPSSM can be triggered if there is market disruption by any product originating in the Chinese mainland (including textiles) and also if any safeguard/remedial action is taken by another WTO Member (including the Chinese mainland) to prevent market disruption on its territory which in turn causes significant trade diversions of a product from the Chinese mainland to the EU.

Under the TPSSM, the European Commission will initiate a proceeding and may invite consultations with the Chinese mainland beforehand. After initiation it will seek all information it deems necessary from both the Member States and all interested parties that make themselves known. Meetings will be held and documents can be inspected by interested parties. The European Commission may carry out verification visits (including to Chinese exporters’ premises if agreed to) to examine records of exporters, importers, EU producers and trade bodies.

In investigating the threat or existence of market disruption, the European Commission will examine factors including the volume of the imports concerned, their effect on EU prices for the like or directly competitive products, and the effect on the EU industry concerned. In investigating a significant trade diversion, the Commission’s examination will include any increasing trends in market share of the Chinese mainland-origin imports, the action taken or proposed by the other WTO Member(s), increasing EU trends in volume of the Chinese mainland-origin imports and conditions of demand and supply in the EU.

Under the TPSSM, the European Commission can, on its own, impose provisional safeguard measures in “critical circumstances”. The measures cannot exceed 200 days and can take the form of customs duties or quotas. Where the European Commission definitively finds the existence of market disruption or significant trade diversion, definitive safeguard measures can be adopted either by the European Commission or by a qualified majority of the Council. Safeguard measures can remain in force for up to four years, but can be extended on review. A trade diversion measure must be terminated within 30 days of the expiration of the WTO Member’s action which caused the trade diversion.

The TPSSM (and any measure adopted under it) will expire on 11 December 2013. Once a proceeding is initiated under the TPSSM, the investigation itself should wherever possible be concluded within 9 months, but can be extended for up to two months.

2.10.3 Others – The Trade Barriers Regulation (TBR)

Economic operators in the EU and the governments of the EU Member States may request the European Commission to respond to any trade barriers put in place by third countries, with a view to eliminating the resulting injury or adverse trade effects in accordance with international trade rules.[45] The substantial and procedural rules regulating these requests are contained in Council Regulation 3286/94, laying down Community procedures in the field of the common commercial policy in order to ensure the exercise of the Community’s rights under international trade rules (the “TBR”). The TBR applies not only to goods but also to certain services, particularly cross-border services.

Trade barriers which fall under the scope of the TBR are any trade practice adopted by a third country but prohibited by international trade rules which give a party affected by the practice a right to seek elimination of the effect of the practice in question. These international trade rules are essentially those of the WTO and those set out in bilateral agreements with third countries to which the EU is a party.

a) Initiation of the Investigation

Complaints under the TBR may be lodged in three ways: (i) by the EU industry[46] that has suffered material injury as a result of trade barriers that have an effect on the EU market; (ii) by one or more EU enterprises[47] that have suffered adverse trade effects as a result of trade barriers that have an effect on the market of a third country; or (iii) by a Member State denouncing an obstacle to trade. Complaints must be submitted to the European Commission in writing. The complaint must contain sufficient evidence of the existence of the trade barriers and of the injury or adverse trade effects resulting therefrom.

In examining injury or adverse trade effects, the European Commission will take account of certain factors such as the volume of EU imports or exports concerned, the prices of the EU industry’s competitors, the rate of increase of exports to the market where the competition with EU products is taking place, the export capacity in the country of origin or export, and so on. The European Commission will decide on the admissibility of a complaint within 45 days.

If a complaint is deemed admissible, an examination is initiated and announced through publication of an announcement in the Official Journal of the EU. This announcement will indicate the product or service and countries concerned. The European Commission will then gather all the relevant information from the parties involved.

b) Outcome of the Investigation

When it is found as a result of the examination procedure that the interests of the EU do not require any action to be taken, the procedure will be terminated. When, after an examination procedure, the third country or countries concerned take measures to eliminate the adverse trade effects or injury referred to by the complainant, the procedure may be suspended. It may also be suspended in order to try to find an amicable solution that may result in the conclusion of an agreement between the third country or countries concerned and the EU.

Where it is found, as a result of the examination procedure, that an action is necessary to protect the interests of the EU, the EU may adopt appropriate measures including the following:

  • suspension or withdrawal of any concession resulting from commercial policy negotiations;
  • the raising of existing customs duties or the introduction of any other charge on imports;
  • the introduction of quantitative restrictions or any other measures modifying import or export conditions or otherwise affecting trade with the third country concerned.
  • Where the EU’s international obligations require it to follow prior international consultation or dispute settlement procedures (such us through the WTO Dispute Settlement procedures), the above-mentioned measures may only be implemented at the end of these procedures and in accordance with their conclusions.

2.10.4 Trade Defence Reform

The European Commission announced on 16 December 2010 that the European Parliament reached an agreement with the Council on the new Regulation on implementing powers for the Commission. In practical terms, these new rules will likely be of some interest to businesses from third countries exporting their goods to the EU, as they will also apply to trade defence measures adopted by the EU’s lawmakers.

The new EU Treaty (the Treaty of Lisbon) foresees providing the Commission with what is known as implementing powers. In the past, such powers were submitted to traditional comitology procedures (in essence, this means that committees comprising Member State representatives were able to vote for or against the Commission’s proposals, such as in the case of anti-dumping measures where this was done by means of a simple majority).

The mechanism of control foreseen by the new Regulation is still based on “comitology” – i.e., committees comprising Member States’ representatives to which the Commission submits draft implementing measures – but, contrary to the present system, there can be no intervention from the Council as a further appeals body.

More importantly for third country manufacturers exporting their goods to the EU, the Regulation foresees that implementing measures in policy areas such as trade defence will be included in the normal regime. Until now these measures were submitted to special procedures in which the Council frequently had the last word, allowing some political arguments to be considered.

The new procedures will give more flexibility to the Commission and, in effect, greater political discretion. In the absence of a qualified majority in favour of, or against, a Commission draft implementing act (e.g., a draft anti-dumping regulation), the Commission will have the choice of either adopting the act or merely further reviewing it.

The only exception, where the Commission needs a positive opinion of the committee to adopt the draft implementing act, relates to definitive multilateral trade safeguard measures. This situation is unique, however, and will unfortunately not apply in the case of other trade defence measures, such as anti-dumping and countervailing definitive measures, which are of particular and major interest to businesses exporting products from several countries, including mainland China.

As a result, the Commission’s proposals for most trade defence measures will be adopted through qualified majority voting, requiring at least two-thirds of votes to oppose them, contrary to the current system of simple majority voting. In addition, the votes cast by the Member States will no longer be counted equally, as the voice of more populated countries will be given proportionally more weight.

This will make it much harder for the Member States to block the imposition of measures on imports of products. This is because some bigger (protectionist-oriented) Member States, such as Spain, France or Italy, are expected to club together to push through the adoption of trade defence measures.

Businesses will certainly recall the criticism from Trade Commissioner Karel De Gucht of the current legislative procedure under which trade defence measures are being adopted. He claimed that it allegedly makes Member State representatives in the Anti-dumping Committee susceptible to lobbying and geopolitical pressures. The new system will reduce this.

In this respect, the voting reform will likely be detrimental to traders from third countries, as, by extension, the new procedure will allow less space for approaching Member States with policy arguments which are not taken into consideration by the Commission.

Finally, it should be recalled that for all comitology procedures, all documents submitted to the committees will simultaneously be disclosed to the European Parliament and to the Council. These two institutions, on a completely equal footing, will also have a “scrutiny right”: they may indicate at any time that they consider the draft implementing act to exceed the powers conferred by the relevant legal basis on the Commission. In such a case, the Commission will merely have to review the draft measure in question and then explain to the European Parliament and the Council what it intends to do.

Entry into force of the new “comitology” Regulation, on 1 March 2011, automatically replaces the existing system.

 


[38] A product is considered dumped if its export price to the EU is less than the comparable price for a like product established in the ordinary course of trade within the exporting country. Computations of the dumping margin may be complicated, as the necessary adjustments for differences in market structure (a distinction is made between market and non-market economies), taxation, time of sales, and range of products considered to be affected have to be taken into account.

[39] The determination of injury requires evidence of: significant increases in the volume of dumped imports, either in absolute terms or relative to production or consumption in the EU; price undercutting; and the adverse impact on EU industry in relation to production and utilisation of capacity, stocks, sales, market share, price changes, profits, returns on investments, cash flow, and employment. The Regulation stipulates that there must be a causal link between dumping and injury.

[40] The interests of the EU include those of the industry and of the users and consumers. The cost of adopting the measures by the EU must not be disproportionate to the benefits.

[41] A subsidy exists if there is a financial contribution by a government in the country of origin or any form of income or price support, which confers a benefit to the recipient. Examples of measures which may amount to a subsidy are, inter alia, grants, loans at preferential interest rates, tax benefits, provision of goods or services at preferential rates, and provisions of equity capital contrary to the usual investment practice of private investors.

[42] For the source of the data see http://trade.ec.europa.eu/doclib/docs/2011/january/tradoc_147247.pdf

Data updated up to January 2011.

[43] Previously, safeguards fell under Council Regulation 3285/94 on the common rules for imports. That Regulation was substantially amended several times. In the interests of clarity and rationality the Regulation has been codified, resulting in new Council Regulation 260/2009. Council Regulation 3285/94 was duly repealed.

[44] Another instrument, namely, Regulation 138/2003, was adopted as a specific safeguard against exports of textiles from mainland China should certain conditions have prevailed. Regulation 138/2003 expired on 31 December 2008.

[45] “Injury” would include any material injury which an obstacle to trade threatens to cause to a Community industry on the EU market. “Adverse trade effects” are those which an obstacle to trade threatens to cause to EU enterprises on the market of any third country, and which have a material impact on the economy of the Community or of a region of the Community, or on a sector of economic activity therein.

[46] “Community industry” means all EU producers or providers of products or services which are the subject of an obstacle to trade or all those producers or providers whose combined output constitutes a major proportion of total Community production of the products or services in question.

[47] “Community enterprise” means a company formed in accordance with the law of a Member State and having its registered office, central administration or principal place of business within the Community, directly concerned by the production of goods or the provision of services which are the subject of the obstacle to trade.

Content provided by Hong Kong Trade Development Council
Comments (0)
Shows local time in Hong Kong (GMT+8 hours)

HKTDC welcomes your views. Please stay on topic and be respectful of other readers.
Review our Comment Policy

*Add a comment (up to 5,000 characters)