In Jinan Meide Casting v Council (Case T-424/13), the EU General Court annulled the anti-dumping measures imposed on imports of threaded tube and pipe cast fittings of malleable cast iron for Jinan Meide Casting Co Ltd products. The judgment highlights deficiencies in the EU trade defence system in striking a balance between transparency and rights of defence on the one hand and the protection of confidential data on the other hand.
Jinan is a Chinese company producing threaded tube and pipe cast fittings of malleable cast iron. Jinan's exports to the European Union were made subject to anti-dumping duties further to an anti-dumping investigation. The dumping margin for Jinan was based on a comparison of its export prices with a normal value that was established on the basis of an Indian analogue country producer, Jainson Industries. As the determination of the normal value in such cases relies on information from an analogue country producer, the European Commission does not, as a rule, disclose the calculation thereof to the exporter (or another interested party). The commission adopted the same approach in this case, thereby depriving Jinan of the ability to verify whether its dumping margin was correctly determined.
The commission even refused to disclose the calculation, despite the fact that Jainson had authorised the commission to disclose to Jinan's lawyers the data that it used to establish the normal value. On this basis, Jinan requested the commission to disclose the normal value calculations, as it considered that there was no longer any ground to keep these confidential. The commission refused, arguing that it could not waive confidentiality selectively for specific interested parties and that this would amount to discrimination with respect to the other exporting producers.
Jinan insisted on the need to be provided with access to the normal value determinations, but the commission refused to budge. Anti-dumping measures of 40.8% were subsequently imposed on Jinan. This duty level corresponded to the commission's dumping margin based on a calculation which Jinan was unable to verify.
Jinan lodged an action for annulment against the anti-dumping measures, arguing, among other things, that the EU institutions had infringed its rights of defence insofar as they failed to disclose the normal value calculations. These calculations constituted essential facts and considerations that had to be disclosed under Article 20(2) of the basic anti-dumping regulation. Since Jainson had authorised the disclosure, Jinan argued that the normal value calculations could not be considered as confidential information for Jinan and that the commission was therefore obliged to disclose them. Jinan argued that by refusing to do so, the commission infringed Jinan's rights of defence. Finally, Jinan explained that disclosing the calculations would not have led to discrimination, as the express authorisation to disclose the data to Jinan placed it in a different situation to that of the other exporting producers.
The sole ground that the commission had relied on during the investigation to reject the request for disclosure of the normal value calculations was the need to respect the principle of non-discrimination with regards to the other exporting producers. In addition to the ground relied on by the commission during the investigation, the council argued before the General Court that:
- Jainson's permission could apply only to the information that it had itself submitted to the commission and not the normal value calculation itself, which was an internal commission document; and
- normal value calculations are confidential by nature, and as a result the commission had to refuse Jinan's request, despite Jainson's authorisation.
The court rejected all of these arguments and instead found that the obligation to ensure the confidential treatment of information covered by business secrecy cannot deprive the other parties concerned (particularly exporters) of the procedural safeguards and rights of defence. Rather, the interests safeguarded by the special protection which business secrets enjoy must be balanced against the rights of defence of the interested parties. The court held that in an anti-dumping investigation, even in the case of information covered by business secrecy, the commission cannot be placed under an absolute obligation to refuse its disclosure without assessing the specific circumstances of the case and, in particular, the specific situation of the interested party concerned. According to the court, the particular situation of the interested party regarding the information and the position that that interested party occupies on the market should be considered in relation to the position of the supplier of the information. Moreover, the court stressed the need to weigh the interests safeguarded by the protection of business secrets against the rights of defence of the interested parties.
The court concluded that the commission was wrong to rely on the need to comply with the principle of non-discrimination in order to reject Jinan's request for the disclosure of the normal value calculations. On this basis, the court found that Jinan's rights of defence were infringed. It also concluded that this infringement could have affected the procedure. Indeed, if Jinan would have had access to the calculations, it could have identified certain errors and had a greater chance of its objections being taken into account by the commission. As a result, the anti-dumping measures were annulled insofar as Jinan was concerned.
This case, while based on particular facts, illustrates the deficiencies in the EU trade defence system insofar as balancing the rights of defence and the need to protect confidentiality is concerned. A key element of trade defence proceedings is the large amount of confidential information that is submitted to the investigating authority by all the interested parties. All this confidential information warrants the necessary protection and there are sufficient safeguards to this end in World Trade Organisation (WTO) and EU law. However, access to such information is often vital for interested parties to adequately exercise their rights of defence. This necessitates a balancing act between protecting genuinely confidential information and ensuring the highest possible level of transparency.
Too often the commission's practice does not involve such a balancing exercise. Rather, as a rule, it will refuse any actual disclosure of such confidential information in the framework of dumping or injury margin determinations. For exporters from non-market economies that are not granted market economy treatment, this means that an essential part of the dumping determination (ie, the normal value calculations) is established based on information to which the exporting producer has no access. This creates impediments to the rights of defence. The same problem is present where the duty level is based on the injury margin, rather than on the dumping margin. The injury margin is based on a comparison of union industry and exporter prices. In an attempt to avoid passing on the exporter's information to the union industry and vice versa, the determination is never fully disclosed by the commission. This deprives exporters and union producers from fully exercising their rights of defence. Similar concerns may arise in case determinations are (partially) made based on available facts (which can include information obtained from another interested party). All such situations result in the imposition of duties based on margin calculations that have never been checked by any interested party. This deprives the interested parties of their rights of defence in relation to calculations that are of crucial importance to them, as they form the basis for a possible imposition of duties. In addition, not granting access prevents the commission from benefitting from additional reviews, something that would undoubtedly be beneficial to the overall quality of such determinations.
In contrast, in the United States a system is in place whereby representatives of the interested parties to a trade defence proceeding can, under certain specific and clearly defined strict conditions, have access to the confidential information of the other interested parties. This is done under an administrative protective order. Such systems are explicitly permitted under WTO law and appear to satisfy the General Court's call on EU institutions to use their discretion to determine the most appropriate way of reconciling parties' right to disclosure and the confidentiality of certain information.
Should such a system have been in place in the European Union, there would have been no need (or grounds) for Jinan to ask for an annulment on the basis of the lack of disclosure and a lot of time could have been spared for the council, the commission and Jinan (as well as the court). Such a system would significantly improve the quality of EU trade defence measures to the benefit of all interested parties.
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