Legal framework

Domestic legislation

What is the main domestic legislation as regards trade remedies?

The EU’s anti-dumping rules are set out in Council Regulation (EU) 2016/1036 on the protection against dumped imports from countries not members of the EU (https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:02016R1036-20180608).

The EU’s anti-subsidy rules are set out in Council Regulation (EU) 2016/1037 on the protection against subsidised imports from countries not members of the European Community (https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:02016R1037-20180608).

The EU safeguard rules with regard to imports from other members of the WTO are set out in Council Regulation (EU) 2015/478 on the common rules for imports (related to imports from WTO members) (https://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1470399764467&uri=CELEX:32015R0478).

The safeguard rules for imports from countries that are not members of the WTO are set out in Council Regulation (EU) 2015/755 on common rules for imports from certain third countries (related to imports from non-WTO members) (https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:02015R0755-20170519).

International agreements

In general terms what is your country’s attitude to international trade?

The EU is a WTO member and comprises 28 member states. Among the founding principles are the four freedoms of movement, namely the free movement of goods, free movement of people, free movement of capital and free movement of services. Within the EU, most trade is therefore free. Exceptions exist for certain types of goods, such as military items, certain dual-use items, waste, pesticides and biocides, and for reasons of national security and health.

As regards third countries, the EU forms a customs union with common import and export rules, and customs duties and trade defence measures apply uniformly among member states. Specific restrictions and requirements, such as licensing, registration, classification, labelling and packaging requirements exist, at both EU and member state level, for the import and export of several products, such as military items, certain dual-use items, endangered species, waste and biocides, and other chemicals, for public policy reasons.

Overall, in recent years, and in light of international developments, the EU has partially moved away from the rather liberal approach towards international trade it has had in the past. Commission President Jean-Claude Juncker clarified the new position in September 2017 as follows: ‘Let me say once and for all: we are not naïve free traders. Europe must always defend its strategic interests’. Accordingly, the EU and certain member states have become more focused on ensuring that international trade is fair, undistorted and balanced. For instance, in response to the US’s unilateral imposition of higher customs tariffs on certain steel and aluminium products, the EU brought WTO challenges, used a mechanism under the WTO Safeguards Agreement to increase customs tariffs on imports of certain US products and initiated its own safeguard investigation on imports of certain steel products. The EU has also challenged China’s policy on technology transfer before the WTO and is preparing a framework programme, for public policy and security reasons, to better screen foreign investments in strategic industries.

The EU has entered into various bilateral and multilateral trade and partnership agreements with third countries. In January 2016, the Deep and Comprehensive Free Trade Agreement between the EU and Ukraine entered into force. In December 2015, the negotiations of the EU-Vietnam FTA and Investment Protection Agreement (IPA) were completed and procedures are now under way to allow their adoption. The Council is reviewing the agreements in view of their future signature, following which the European Parliament will be called on to give its consent. Following the translations of the two texts, the next step will be for the European Parliament to give its consent, which will probably take place in autumn 2019. This would enable ratification of the FTA by the end of the year. However, the IPA will take longer to enter into force due to the requirement for member state ratification. The EU-Canada Comprehensive Trade and Economic Agreement was signed in 2016 and approved by the European Parliament in February 2017. In September 2017, the agreement entered into force provisionally. It is presently with the EU member states for ratification. On 30 April 2019, the Court of Justice of the EU delivered an opinion confirming the compatibility of the Investment Court System (ICS) with the EU Treaties. This means that no changes need to be made to the text of the EU-Canada agreement and member states’ ratifications can proceed. Equally, no change will be required in the ICS provisions included in the agreements with Singapore, Mexico and Vietnam. On 1 February 2019, the EU-Japan Economic Partnership Agreement entered into force. Negotiations continue separately for an IPA with Japan. The last discussions on the IPA took place on 20-22 March 2019 in Tokyo. The next discussions are planned for the autumn of 2019.

Currently, the EU is negotiating several free trade and partnership agreements, including ones with Australia and New Zealand, India, Indonesia, Chile, Mercosur and Malaysia, and is negotiating an update to the FTA with Mexico and the partnership agreement with the African-Caribbean-Pacific (ACP) countries. The EU is also in discussions with Turkey to update the EU-Turkey Customs Union arrangements. The Council of the EU approved two mandates on 15 April 2019 for an agreement with the US on the elimination of tariffs for industrial goods and conformity assessments.

Special trade regimes are in place for developing and least-developed countries under the General System of Preferences (GSP), the ACP partnership agreement (see above) and the OCT preference, which relates to certain overseas countries and territories. A complete list of the current bilateral and multilateral trade agreements to which the EU is party, as well as unilateral preference arrangements, is available at https://ec.europa.eu/trade/policy/countries-and-regions/. In addition, the EU is part of the Trade in Services Agreement negotiations and the negotiations of the Agreement on Environmental Goods.

Trade defence investigations (outside the WTO dispute settlement system)

Government authorities

Which authority or authorities conduct trade defence investigations and impose trade remedies in your jurisdiction?

The European Commission - Directorate General for Trade (DG Trade) (https://ec.europa.eu/trade/) conducts EU trade remedy investigations. Trade defence measures are imposed by the Commission after consultation of the EU member states in the context of the Council. Member states can veto the imposition of trade defence measures with a qualified majority, weighted by member state population. The Commission is also responsible for the review, adaptation and extension of trade defence measures.

The collection of duties and the enforcement of compliance upon importation lie with the customs authorities of the EU member states. National customs authorities are also competent to investigate potential infringements.

The European Commission’s anti-fraud office (OLAF) (https://ec.europa.eu/anti-fraud/home_en) can conduct investigations into potential avoidance of payment of conventional customs duties or trade defence measures, and provide the results of those investigations to national authorities for enforcement and other follow-ups.

Complaint filing procedure

What is the procedure for domestic industry to start a trade remedies case in your jurisdiction? Can the regulator start an investigation ex officio?

Trade remedy investigations are normally initiated upon request by an EU industry. Since the Trade Defence Instruments (TDI) Modernisation entered into force in June 2018, natural or legal persons and associations not having legal personality, including trade unions, can also file a request on behalf of the EU industry. For new cases, expiry reviews and full interim reviews, the request must be supported by EU producers that account for at least 25 per cent of EU production of the product subject to the request (and EU producers representing more than 50 per cent of EU production that express a position must not oppose the request). For SMEs the TDI Modernisation provisions introduced further assistance.

The Commission can also open investigations ex officio, which it has so far done mostly in the context of the review of long-standing anti-dumping measures and the review of the scope, form or amount of the measures.

Anti-dumping and anti-subsidy complaints must include prima facie evidence of dumping and subsidies respectively, material injury and the existence of a causal link between the allegedly dumped or subsidised imports and the alleged injury. In new investigations, the complaint should also demonstrate that the imposition of trade defence measures would not conflict with the overall interest in the good functioning of the EU’s economy. In expiry reviews, the complaint must demonstrate that there is a likelihood of continuation or recurrence of dumping or subsidisation and material injury should the existing measures be allowed to lapse. An anti-circumvention application must demonstrate prima facie a change in pattern of trade caused by a practice for which there is no other justification than the imposition of trade defence measures.

Requests for the imposition, extension or modification of trade defence measures must be made in writing and accompanied by supporting evidence on dumping or subsidisation, injury, causation and the EU interest. Complainants are required to submit a version of the complaint for inspection by interested parties containing non-­confidential summaries of all confidential data and information.

Upon receipt of a request for the initiation of a new investigation or an anti-circumvention investigation, the Commission has 45 days to formally initiate the proceedings. Expiry review requests must be lodged with the Commission at least three months before the expiry of the measures, and the Commission must initiate the expiry review no later than the date of expiry. There is no statutory time limit within which the Commission must decide upon the initiation of an investi­gation based on an interim review request.

Before formally initiating a trade defence investigation, the Commission consults the EU member states. In anti-subsidy investi­wwgations, the Commission also sends a note verbale to the government of the country or countries involved in the investigation.

Trade defence investigations are formally initiated by a publication in the EU’s Official Journal (OJ).

Contesting trade remedies

What is the procedure for foreign exporters to defend a trade remedies case in your jurisdiction?

Applications for the imposition, extension or modification of trade defence measures must contain lists of known concerned parties, that is, exporting producers in the subject countries, importers, users and other EU producers.

Upon initiation, the Commission invites all known parties to declare their interest to participate in the investigation. In addition, the publication of the initiation of a trade remedy case in the OJ contains an invitation to everyone that considers itself concerned to come forward to register as interested parties within 10 days. In subsidy cases, the EU will also send a note verbale to the government of the subject country, which will then inform the national exporting producers. An executive summary of the applications, including the product definition of the goods subject to the investigation and the names of the known interested parties, is published on the Commission’s website.

Parties that make themselves known to the Commission within the prescribed deadline (and are selected in the sample where sampling is applied) receive a questionnaire that must normally be filled in and returned to the Commission within 37 days. In the questionnaire response, exporting producers must provide detailed information, in particular with regard to their domestic and export sales and production costs. In addition, all parties are entitled to make additional written submissions on topics of relevance to the investigation and have a hearing in person with the case handlers and the hearing officer.

New anti-dumping investigations must be completed within 14 months, and new anti-subsidy investigations within 13 months. No earlier than 60 days and no later than eight or nine months after initiation, the Commission can impose provisional anti-dumping or anti-subsidy measures. Final measures are imposed by the Commission if the investigation shows that dumped or subsidised imports caused material injury to the EU industry and the imposition of trade defence measures is in the overall EU interest.

Trade remedy measures normally remain in place for five years. During that period, the EU industry, exporting producers and other interested parties (eg, users) can request an interim review in the case of changed circumstances of a lasting nature that justify a review of the measures in place. After five years, the EU industry can request an expiry review, whereby the Commission analyses whether there is a risk of continuation or recurrence of dumping or subsidisation and material injury if the measures were allowed to lapse.

WTO rules

Are the WTO rules on trade remedies applied in national law?

The EU (as well as its member states) is a WTO member and WTO law forms an integral part of EU law. As such, the EU generally recognises and complies with WTO obligations, including in the area of trade defence.

The EU has been involved in numerous disputes before the WTO Dispute Settlement Body (DSB), as both complainant and defendant, as well as as an intervening third party.

Overall, the EU has been quite careful to comply with WTO rulings. In the area of anti-dumping and anti-subsidy rules, the EU has passed specific legislation to facilitate bringing EU law into compliance with WTO rulings (see Regulation (EU) 2015/476 of the European Parliament and of the Council of 11 March 2015 on the measures that the Union may take following a report adopted by the WTO Dispute Settlement Body concerning anti-dumping and anti-subsidy matters).

However, WTO law does not generally have direct effect in the EU and it can be directly invoked before the EU courts only where the EU intended to implement a particular WTO obligation, or where an EU act refers explicitly to specific WTO provisions (see in particular ECJ Cases 70/78 Fediol and C-69/89 Nakajima).

Appeal

What is the appeal procedure for an unfavourable trade remedies decision? Is appeal available for all decisions? How likely is an appeal to succeed?

The Commission imposes provisional and definitive trade remedy measures by way of regulations (secondary EU acts). Final measures can be appealed under article 263 of the Treaty on the Functioning of the European Union (TFEU) before the EU’s General Court within two months from the publication of the regulation. Provisional measures can be appealed only with regard to any autonomous or independent effects capable of being attributed solely to them (ie, not also dealt with by the regulation imposing the definitive measures).

Exporting producers and the EU producers that cooperated in the Commission investigation, as well as their representative industry associations, have standing to bring direct challenges under article 263 TFEU of trade remedy measures. Importers have standing only in limited situations, but can bring a challenge of trade remedy measures before national courts and then ask the national court to seek a preliminary ruling from the EU Court of Justice (ECJ) under article 267 TFEU.

On the substance, an appeal will be successful if the Commission has committed a severe procedural breach, a manifest error of assessment, a violation of the law or a misuse of powers. In most cases brought to date, the appeal has not been successful, but there are many examples of successful appeals.

Review of duties/quotas

How and when can an affected party seek a review of the duty or quota? What is the procedure and time frame for obtaining a refund of overcharged duties? Can interest be claimed?

Importers can make requests for refunds of anti-dumping or countervailing duties paid within six months from importation of the subject goods. A request must be filed with the Commission via the member state where the goods were released for free circulation, and must demonstrate that the amount of dumping or subsidisation decreased as compared to the duties imposed by the definitive measures. Therefore, while the requests for duty refunds can only be filed by the importing party paying the duties, they require the full cooperation of the relevant exporting producer or producers. Since June 2018, there is also the possibility for exporters to request the refund of anti-dumping or countervailing duties paid after the opening of an expiry review which is terminated without the continuation of the measures in question.

Exporting producers can also request that the Commission initiate an interim review with a view to lowering an anti-dumping or countervailing duty applicable if there are changes of a lasting nature - as compared to the initial investigation - that affect the dumping or countervailing margin. The Commission will generally not grant an interim review request until at least one year after the imposition of the definitive measures. The result of an interim review could be an increase, as well as a decrease, of the initial measures.

Compliance strategies

What are the practical strategies for complying with an anti-dumping/countervailing/safeguard duty or quota?

For cost, insurance and freight (CIF) sales, importers are usually the parties liable for the payment of customs duties. They therefore have a strong interest and should work with the exporter in the subject country to ensure that all exports and imports are made in compliance with applicable trade defence measures. Illegal avoidance of trade remedy duties, for example, by circumvention or the issuance of false origin certificates, are customs fraud and can lead to criminal prosecution, the retroactive imposition of duties and high fines. The Commission, customs authorities of member states and OLAF have frequently and systematically investigated circumvention practices and customs fraud in relation to the importation of products subject to anti-dumping or anti-subsidy duties, including aluminium foil, bicycles, citric acid, hand pallet trucks, molybdenum wire, solar modules and seamless pipes and tubes of stainless steel.

Exporting producers and importers therefore often rely on the options provided under the EU trade laws, for example, refund and review proceedings, as discussed under question 8, when seeking ways to lower or eliminate the payment of anti-dumping or anti-subsidy duties.

Customs duties

Normal rates and notification requirements

Where are normal customs duty rates for your jurisdiction listed? Is there an exemption for low-value shipments, if so, at what level? Is there a binding tariff information system or similar in place? Are there prior notification requirements for imports?

Imports must comply with the customs formalities set out in the Union Customs Code (UCC) (Council Regulation 952/2013), and the relevant implementing regulations (ie, the UCC Delegated Act (Commission Delegated Regulation 2015/2446) and the UCC Implementing Act (Commission Implementing Regulation 2015/2447)). These acts are supported by the UCC Transitional Delegated Act (Commission Delegated Regulation 2016/341) and the UCC Work Programme (Commission Implementing Decision No. 2016/578).

Certain goods, such as military items, endangered species, waste, biocides and other chemicals are subject to special licensing, registration, classification, labelling and packaging requirements before they can be placed into free circulation.

The EU customs duties payable upon importation are set out in the Combined Nomenclature. A link to the current version is available on the website of the European Commission’s Directorate General for Tax and Customs (DG TAXUD) at https://ec.europa.eu/taxation_customs/business/calculation-customs-duties/what-is-common-customs-tariff/combined-nomenclature_en.

Goods whose value does not exceed the amount of €150 are exempted from the payment of customs duties when they are provided directly to the buyer (https://ec.europa.eu/taxation_customs/individuals/buying-goods-services-online-personal-use/buying-goods/buying-goods-online-coming-from-a-noneu-union-country_en).

National customs authorities issue binding tariff informations (BTIs) and binding origin informations (BOIs) upon a written request by an economic operator. The BTIs and BOIs are valid for imports of the applicant (only) throughout the EU, but other operators often base their own requests on existing rulings. A list of BTIs currently in place can be accessed via the website of the Commission’s DG TAXUD at https://ec.europa.eu/taxation_customs/business/calculation-customs-duties/what-is-common-customs-tariff/binding-tariff-information-bti_en.

Special rates and preferential treatment

Where are special tariff rates, such as under free trade agreements or preferential tariffs, and countries that are given preference listed?

The EU acts implementing international agreements into EU law specify the special tariff rates applicable under those agreements. A list of the EU’s current international agreements with links to the respective implementing laws can be found at https://ec.europa.eu/trade/policy/countries-and-regions/.

Further rules can be found in the UCC (Council Regulation 952/2013), the UCC Delegated Act (Commission Delegated Regulation 2015/2446) and the UCC Implementing Act (Commission Implementing Regulation 2015/2447), respectively.

Regulation (EU) No. 978/2012 sets out the EU’s scheme of generalised tariff preferences (GSP) (https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:02012R0978-20180307). It establishes:

  • a general preference arrangement for developing countries;
  • a special incentive arrangement for sustainable development and good governance (GSP+); and
  • a special arrangement for the least-developed countries (Everything But Arms (EBA)).

Under the GSP, import duties for non-sensitive goods are reduced to zero and for sensitive goods by 3.5 per cent (and 20 per cent for sections S-11a and S-11b of Annex V). Countries that apply for, and to which the EU grants, GSP+ status benefit from additional duty suspensions. For least-developed countries that comply with the EBA conditions, all tariff duties except for Combined Nomenclature Chapter 93 (arms) are suspended.

How can GSP treatment for a product be obtained or removed?

Overall, the Commission can add and remove countries from the list of GSP beneficiaries according to the international status and classification of a country. The GSP benefits for a developing country (except for least-developed countries) can be removed if a country has been classified by the World Bank as a high-income or an upper-middle-income country during three consecutive years or if that country benefits from a preferential market access arrangement that provides the same tariff preferences as the GSP or better. The removal takes effect one (in the first instance) and two (in the second instance) years, respectively, after the entry into force of the decision or preferential agreement.

In addition to the entire withdrawal of GSP benefits, the GSP also provides for the suspension of the duty reductions for imports of specific products if they exceed a certain value threshold over three consecutive years.

The EU can also withdraw the GSP preferences temporarily in respect of all or of certain products originating in a beneficiary country, for any of the following reasons:

  • serious and systematic violation of human and labour rights and environment and governance principles;
  • export of goods made by prison labour;
  • serious shortcomings in customs controls on the export or transit of drugs (illicit substances or precursors), or failure to comply with international conventions on anti-terrorism and money laundering;
  • serious and systematic unfair trading practices, including those affecting the supply of raw materials, which have an adverse effect on the EU industry and which have not been addressed by the beneficiary country;
  • serious and systematic infringement of the objectives adopted by Regional Fishery Organisations or any international arrangements to which the EU is a party concerning the conservation and management of fishery resources; and
  • in cases of fraud, irregularities or systematic failure to comply with or to ensure compliance with the rules concerning the origin of the products and with the procedures related thereto, or failure to provide administrative cooperation as required for the implementation and policing of the GSP.

Is there a duty suspension regime in place? How can duty suspension be obtained?

Economic operators can request a suspension of tariffs on all or a certain quota of imports of semi-finished products or raw materials if these products are not available or not available in sufficient quantities in the EU.

A suspension request must be filed with the European Commission via the member state where the economic operator is located, on the form attached as Annex I of Commission Communication 2011/C 363 (https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2011:363:0006:0017:EN:PDF).

Member states submit the requests they receive twice a year, in March and September, to the Economic Tariff Questions Group (ETQG). The ETQG consists of representatives of the Commission, the member states and Turkey, and examines the requests in three meetings (four if required). EU producers of a product for which duty suspension is requested can object to the request until the second meeting. Appeals against existing duty suspensions must be filed before the first ETQG meeting of a given DS cycle.

Approved duty suspensions enter into force nine months after the submission of the request (ie, for duty suspension requests submitted in March, in January of the following year, and for duty suspension requests submitted in September, in July of the following year). Duty suspensions are usually in place for five years and can be renewed.

Challenge

Where can customs decisions be challenged in your jurisdiction? What are the procedures?

Customs decisions are taken by the national customs authorities of the EU member states. Accordingly they can be challenged at national level before the administrative or judicial courts of the member states. National courts can apply to the ECJ for a preliminary ruling (under article 267 TFEU) if the issue before them concerns a matter of interpretation of EU law.

Economic operators can also challenge certain decisions by the Commission, such as decisions on refund and remission requests, directly before the General Court under article 263 TFEU.

Trade barriers

Government authorities

What government office handles complaints from domestic exporters against foreign trade barriers at the WTO or under other agreements?

The EU Trade Barrier Regulation (EU) 2015/1843 provides a complaint mechanism for EU exporters that experience discriminatory trade practices in third countries.

EU exporters can contact the DG Trade of the European Commission (https://ec.europa.eu/trade/import-and-export-rules/export-from-eu/), and if DG Trade considers a complaint is adequately substantiated it will take measures to address the situation. Normally, the Commission will first seek an amicable solution with the importing country via bilateral talks. If this is not possible, the EU can request consultations at the WTO.

Complaint filing procedure

What is the procedure for filing a complaint against a foreign trade barrier?

Under article 5 of Council Regulation (EC) No. 2015/1843, a complaint may be lodged with the Commission by an EU industry sector or individual enterprises. The complaint must detail the obstacles to trade and the injurious effect caused to the EU industry or business. Upon receipt, the Commission will decide within 45 days whether to initiate an examination procedure.

Member states can also request that the Commission initiate an examination procedure.

Grounds for investigation

What will the authority consider when deciding whether to begin an investigation?

When making its decision, the Commission considers the evidence presented by the complainant, particularly the evidence of the existence of a trade barrier, the indication as to how this barrier breaches international trade rules and the evidence that the trade barrier results or threatens to result in adverse trade effects or injury. Regard will also be had to the interests of the EU as a whole, as well as to the wider implications that the decision may have for the EU’s common commercial policy.

Measures against foreign trade barriers

What measures outside the WTO may the authority unilaterally take against a foreign trade barrier? Are any such measures currently in force?

Under article 13(3) of Council Regulation (EC) No. 2015/1843, the EU may take unilateral commercial policy measures, such as a suspension or withdrawal of concessions, an imposition (or increase) of customs duties or the introduction of quantitative restrictions.

However, in relation to WTO members, article 13(2) of Council Regulation (EC) No. 2015/1843 first obliges the EU to go through the WTO dispute settlement process. Regulation (EU) No. 654/2014 of the European Parliament and of the Council of 15 May 2014 lays down specific provisions for the exercise of the EU’s rights for the application and enforcement of international trade rules, in particular those established under the auspices of the WTO. A recent example is the EU’s adoption of additional customs duties on products from the US, including Harley Davidson motorbikes, in July 2018, in response to the US imposition of additional tariffs on imports of steel products from inter alia the EU.

In practice, for most trading partners, the measures the EU is able to take outside the WTO framework are limited to bilateral talks.

Private-sector support

What support does the government expect from the private sector to bring a WTO case?

For the EU to bring a case to the WTO DSB, there must be a severe and clear enough infringement of the obligations of the third country that have a material impact on EU industry. Also, the EU considers the level of the infringement and the effects on the wider EU economy. In principle, the European Commission relies on industry to provide relevant market and industry facts and information, but does not expect any particular legal support from the private sector in order to bring a WTO action.

Notable non-tariff barriers

What notable trade barriers other than retaliatory measures does your country impose on imports?

Generally, the EU does not maintain non-tariff barriers on imports. There are, however, import requirements, such as customs clearance formalities, and for certain products licensing, registration, classification, labelling and packaging requirements, at EU and member state level, for reasons of public health or safety, including military items, certain dual-use items, endangered species, waste, biocides and other chemicals.

Import restrictions exist for instance at national level for certain military items.

At EU level, the following goods are among those subject to non-tariff import restrictions and possibly intra-EU transfer restrictions:

  • endangered species: Council Regulation (EC) No. 338/97 of 9 December 1996 on the protection of species of wild fauna and flora by regulating trade therein (https://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1431359714963&uri=CELEX:01997R0338-20141220);
  • timber: Regulation (EU) No 995/2010 of the European Parliament and of the Council of 20 October 2010 laying down the obligations of operators who place timber and timber products on the market (https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32010R0995);
  • waste: Regulation (EC) No. 1013/2006 of the European Parliament and of the Council of 14 June 2006 on shipments of waste (https://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1431360214820&uri=CELEX:02006R1013-20140526); and
  • certain chemical substances and mixtures: Regulation (EC) No. 1272/2008 of the European Parliament and of the Council of 16 December 2008 on classification, labelling and packaging of substances and mixtures, amending and repealing Directives 67/548/EEC and 1999/45/EC, and amending Regulation (EC) No. 1907/2006 (Text with EEA relevance) (https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:02008R1272-20180301).

Export controls

General controls

What general controls are imposed on exports?

The main instruments setting out the import and export rules of the EU are the:

  • Union Customs Code (Council Regulation 952/2013);
  • UCC Delegated Act (Commission Delegated Regulation 2015/2446);
  • UCC Implementing Act (Commission Implementing Regulation 2015/2447);
  • UCC Transitional Delegated Act (Commission Delegated Regulation 2016/341);
  • UCC Work Programme (Commission Implementing Decision No. 2016/578);
  • EU Dual-Use Regulation 428/2009; and
  • national regulations on export of military and dual-use items.

Under articles 263 and seq of the UCC, goods intended for export are subject to an export declaration. Furthermore, certain goods, such as military items listed in the national military lists, dual-use items listed in Annex I to Regulation 428/2009, waste and endangered species, require a licence prior to their export.

Government authorities

Which authorities handle the controls?

National customs authorities implement the EU customs rules, impose and collect import and export duties, oversee goods in transit and under special customs procedures, and pursue customs and export violations. A list of national customs authorities can be found here: https://ec.europa.eu/taxation_customs/national-customs-websites_en. If the export of a good requires a licence, this must be obtained from the responsible authorities and included in the export documentation (see also questions 23 and 28).

Special controls

Are separate controls imposed on specific products? Is a licence required to export such products? Give details.

Certain goods, technology and software require prior authorisation for exports and intra-EU transfers (from one EU member state to another).

Particularly noteworthy are the export and intra-EU transfer restrictions with regard to military items and certain dual-use items. Military items listed on the military lists of the member states require a licence for export and intra-EU transfer. Dual-use items listed in Annex I to Regulation 428/2009 require a licence for export and dual-use items listed in Annex IV to Regulation 428/2009 also require a licence for intra-EU transfers. The licensing procedure is handled by the national export control authorities of the EU member states. Member states may also impose additional (stricter) export controls. Information on additional national rules and the national authorities responsible for export controls and sanctions is available at DG Trade’s website at http://ec.europa.eu/trade/import-and-export-rules/export-from-eu/dual-use-controls/.

Additional restrictions on exports and intra-EU transfers exist, inter alia, for waste, endangered species, pesticides, biocides, food and chemicals.

Supply chain security

Has your jurisdiction implemented the WCO’s SAFE Framework of Standards? Does it have an AEO programme or similar?

Yes, the EU has implemented an authorised economic operator system. Further information on the EU’s AEO system is available at https://ec.europa.eu/taxation_customs/dds2/eos/aeo_consultation.jsp?Lang=en.

Applicable countries

Where is information on countries subject to export controls listed?

The EU export controls on military and dual-use items apply equally to all non-EU countries. For partner countries and countries considered safe destinations, simpler procedures are in place, but there is no system of licence exception as in the US. In addition, the EU and member states have imposed sanctions and embargoes against various third countries (see questions 26 and 29).

Named persons and institutions

Does your jurisdiction have a scheme restricting or banning exports to named persons and institutions abroad? Give details.

The EU has imposed specific restrictions on natural and legal persons engaged in terrorism by Regulations 2580/2001 and 881/2002 (https://ec.europa.eu/fpi/what-we-do/sanctions_en). Recently the EU also intro duced Regulation 2019/796 which imposes specific restrictions on natural and legal persons engaged in cyber-attacks that threaten the EU or its member states (see question 32). In addition, country-specific embargoes also contain person-related sanctions (see question 30).

Penalties

What are the possible penalties for violation of export controls?

Violations of export controls can be subject to administrative or criminal sanctions, or both, depending on the gravity of the violation and the specific law of the respective EU member state. Smaller violations can lead to revocation of export privileges (eg, global licences), warnings and fines. More severe violations will, in addition, entail higher fines, and can lead to prison sentences for the operators responsible.

Financial and other sanctions and trade embargoes

Government authorities

What government offices impose sanctions and embargoes?

In the EU, the competences to impose sanctions and embargoes are split between the Commission and the EU member states. This is because the EU member states have not delegated to the EU the competence to impose military embargoes and certain person-related sanctions, such as travel bans. These types of sanctions are, therefore, formally implemented at national level by each member state authority on the basis of a common decision taken by the EU member states in the framework of the Common Foreign and Security Policy. The imposition of economic sanctions, including the freezing of funds, is within the EU’s competence. These sanctions are therefore implemented in the form of Regulations under the TFEU.

The export control and customs authorities of the member states are responsible for the handling of export licence applications and the prosecution of violations of sanctions and embargoes.

Applicable countries

What countries are currently the subject of sanctions or embargoes by your country?

The EU and its member states have imposed various embargos and sanctions against third countries. Most notably, the EU has comprehensive embargo regimes that restrict trade with North Korea, Russia and Syria. The previously comprehensive Iran sanctions were largely lifted in January 2016.

A complete list with a summary of the restrictions together with links to the respective regulations is available at https://ec.europa.eu/fpi/what-we-do/sanctions_en. In addition, there are specific sanctions targeting natural and legal persons to combat terrorism (see questions 26 and 30).

Specific individuals and companies

Are individuals or specific companies subject to financial sanctions?

Yes, natural and legal persons can in particular be subject to asset freezes. Sanctions usually also contain a general prohibition to make funds or economic resources available to sanctioned legal and natural persons. An up-to-date list of persons and entities subject to EU sanctions can be accessed at https://ec.europa.eu/fpi/what-we-do/sanctions_en.

Other relevant issues

Other trade remedies and controls

Describe any trade remedy measures, import or export controls not covered above that are particular to your jurisdiction.

Not applicable.

UPDATE & TRENDS

Recent developments

Are there any emerging trends or hot topics in trade and customs law and policy in your jurisdiction?What effects are Brexit, the withdrawal of the US from TPP, the slowdown of TTIP, RCEP; and negotiations of FTAs (such as the EU–Japan Free Trade Agreement) expected to have on your jurisdiction?

Key developments32 Are there any emerging trends or hot topics in trade and customs law and policy in your jurisdiction?Brexit

On 29 March 2017, the United Kingdom (UK) invoked article 50 of the Treaty of the European Union (TEU), according to which the country was deemed to leave the EU within two years. However, after three unsuccessful attempts to get a Withdrawal Agreement agreed with the European Commission ratified by the House of Commons, the UK Government requested an extension of article 50 in order to avoid leaving the EU without a deal. On 10 April 2019, the EU leaders of the remaining 27 member states agreed to grant the UK an extension until 31 October 2019 to allow for the ratification of the Withdrawal Agreement. As a result of this extension, the UK took part in European Elections on 26 May 2019.

The Withdrawal Agreement foresees a transitional period until 31 December 2020, which could be extended by up to two more years if both parties agree. The transitional period is meant to provide citizens, businesses and administrations time to adapt to the new situation, and for the UK and the EU to negotiate a new trade deal. During the transitional period, the UK will remain in the EU Customs Union and the Single Market, but it will not be represented in the EU decision-making bodies.

If the Withdrawal Agreement is ratified by both sides before 31 October 2019, the UK will leave on the first day of the following month. The European Council has reiterated that there can be no reopening of negotiations on the Withdrawal Agreement, and that any unilateral commitment, statement or other act should be compatible with the text and the spirit of the Withdrawal Agreement and must not hamper its implementation. The decision was taken in agreement with the UK. Until 31 October 2019, the UK still has the possibility of revoking its invocation of article 50 and cancel Brexit altogether.

US tariff increase on imports of certain steel and aluminium products

On 8 March 2018, the US adopted safeguard measures in the form of a tariff increase on imports of certain steel and aluminium products. The tariff increase became effective with respect to the EU on 1 June 2018, with an unlimited duration.

Commission Implementing Regulation (EU) 2018/724 mandated the Commission to give written notice, no later than 18 May 2018, to the WTO Council for Trade in Goods that, absent disapproval by the Council for Trade in Goods, the EU suspends the application to the trade of the US of import duty concessions under the GATT 1994 in respect of certain products (listed in Annex I and Annex II to the Regulation), so as to allow for an application of additional customs duties on the importation of these products originating in the US.

On 18 May 2018, the Commission gave the above written notice and the WTO Council for Trade in Goods did not disapprove within 30 days. The EU thereby suspended, in the WTO, the application of import duty concessions to the trade with the US under the GATT 1994 in respect of these products.

Consequently, having regard to article 2 of Regulation 2018/724, the Commission imposed additional customs duties on the products listed in Annex I and Annex II through Commission Implementing Regulation (EU) 2018/886 of 20 June 2018.

Safeguard measures on certain steel products

On 1 February 2019, the European Commission published Regulation 2019/159 imposing definitive safeguard measures on imports of various steel products. The measures concern 26 steel product categories and consist of tariff-rate quotas above which a duty of 25 per cent will apply.

According to Regulation 2019/159, the measures should remain in place for a period of up to three years, but can be reviewed in the case of changed circumstances. Anti-dumping duties on several steel products have been suspended for the period of application of the safeguard measures. On 17 May 2019, the Commission published a notice of initiation of the review of the safeguard measures due to questions related to the Union interest.

Safeguards in free trade agreements

On 13 February 2019, the Council and the European Parliament adopted Regulation 2019/287 concerning bilateral safeguard measures in trade agreements.

The EU regularly concludes trade agreements with third countries, most of which include bilateral safeguard clauses or other mechanisms for the temporary withdrawal of tariff preferences or preferential treatment. Before February 2019, the bilateral safeguard mechanism had been decided separately for each trade agreement. Regulation 2019/287 brings a consistent horizontal framework for the inclusion of such provisions in future agreements.

Regulation 2019/287 currently covers the implementation of the EU-Japan, EU-Singapore and EU-Vietnam free trade agreements. Further agreements can be added to the scope of Regulation 2019/287 by means of future delegated acts.

Iran sanctions

In August 2018, the EU revived the Blocking Statute in response to the US reimposing sanctions against Iranand withdrawing from the Joint Comprehensive Plan of Action (JCPOA). The Blocking Statute shall protect EU operators doing legitimate business in and with Iran from the impact of the re-imposed US sanctions. It prohibits compliance by EU operators with any requirement or prohibition laid down in (certain) US Iran embargo legislation (Iran Sanctions Act of 1996 (ISA); Iran Freedom and Counter-Proliferation Act of 2012 (IFCA); National Defence Authorization Act For Fiscal Year 2012 (NDAA); Iran Threat Reduction And Syria Human Rights Act of 2012 (TRA); and Iranian Transactions and Sanctions Regulations (ITSR)). (The Commission can, however, grant exceptions.) EU natural and legal persons that incur losses because a (contracting) party is complying with the named US rules can claim damages from the latter in EU courts.

In addition, on 31 January 2019, France, Germany and the UK (the €3) set up INSTEX SAS (Instrument for Supporting Trade Exchanges), a special payment mechanism to supporting legitimate European trade with Iran. INSTEX essentially works like a barter trading or offsetting mechanism. For example, a Spanish company buys goods from an Iranian company A for €1 million. A German company sells goods to an Iranian company B for €1 million. Via INSTEX (in the EU and an Iranian counterpart) the sums would be offset and money can be paid from the Spanish company via its bank 1 to INSTEX and by INSTEX via bank 2 to the German company (and likewise on the Iranian side). This way no international (outside EU) payment transaction would be required on the EU side (and the Iranian side, respectively). So far INSTEX has only been used for humanitarian goods, such as medicines, medical equipment and agricultural equipment, which are in any event exempt from the US’s Iran sanctions. However, the idea is ultimately to use INSTEX also for other goods and in particular oil exports from Iran. The US has voiced concerns about the use of INSTEX and not excluded sanctioning the mechanism and parties using it. For further information, the Commission has published a Guidance note to help EU companies with the understanding of the relevant legal acts and the implementation of the Blocking Statute (http://www.gard.no/Content/26003686/Guidance%20note%20on%20blocking%20statute.pdf).

EU creates framework to sanction parties for cyber-attacks threatening the Union or its member states

On 15 May, the EU published Decision 2019/797 and Regulation 2019/796 concerning restrictive measures against cyber-attacks threatening the Union of its member states. The laws sets up a framework to impose travel bans, the freezing of accounts and a prohibition to provide economic and financial resources to natural or legal persons that are considered involved in cyber-attacks (including attempted attacks) on the EU and its member states.

Cyber-attacks are actions originating from outside the EU involving the following:

  • access to information systems;
  • information system interference;
  • data interference; or
  • data interception, where such actions are not duly authorised by the owner or by another right holder of the system or data or part of it, or are not permitted under the law of the EU or of the member state concerned.

The cyber-attacks covered are those that represent an external threat. This includes cyber-attacks that:

  • originate, or are carried out, from outside the EU;
  • use infrastructure outside the EU;
  • are carried out by any natural or legal person, entity or body established or operating outside the EU; or
  • are carried out with the support, at the direction or under the control of any natural or legal person, entity or body operating outside the Union.

Cyber-attacks constituting a threat to member states include those affecting information systems relating to, inter alia:

  • critical infrastructure, including submarine cables and objects launched into outer space, which is essential for the maintenance of vital functions of society, or the health, safety, security, and economic or social well-being of people;
  • services necessary for the maintenance of essential social and economic activities, in particular in the sectors of: energy (electricity, oil and gas); transport (air, rail, water and road); banking; financial market infrastructures; health (healthcare providers, hospitals and private clinics); drinking water supply and distribution; digital infrastructure; and any other sector which is essential to the member state concerned;
  • critical state functions, in particular in the areas of defence, governance and the functioning of institutions, including for public elections or the voting process, the functioning of economic and civil infrastructure, internal security, and external relations, including through diplomatic missions;
  • the storage or processing of classified information; or
  • government emergency response teams.

Cyber-attacks constituting a threat to the EU include those carried out against its institutions, bodies, offices and agencies, its delegations to third countries or to international organisations, its common security and defence policy operations and missions and its special representatives. In addition, restrictive measures can also be imposed in response to cyber-attacks on third countries and international organisations where deemed necessary to achieve common foreign and security policy objectives in the relevant provisions of article 21 of the Treaty on European Union.

First trade defence measures based on new anti-dumping methodology

On 3 May 2019, the Commission published its first anti-dumping and anti-subsidy measures based on the new anti-dumping methodology for imports from countries with significant market distortions. The measures were adopted following an expiry review investigation on imports of organic coated steel from China.

In line with the new anti-dumping methodology, when establishing the normal value, the Commission assessed the existence of significant distortions in the Chinese market, taking into account the potential impact of factors such as:

  • the market in question being served to a significant extent by enterprises which operate under the ownership, control or policy supervision or guidance of the authorities of the exporting country;
  • state presence in firms allowing the state to interfere with respect to prices or costs;
  • public policies or measures discriminating in favour of domestic suppliers or otherwise influencing free market forces;
  • the lack, discriminatory application or inadequate enforcement of bankruptcy, corporate or property laws;
  • wage costs being distorted; and
  • access to finance granted by institutions that implement public policy objectives or otherwise not acting independently of the state.

The analysis showed that prices or costs, including the costs of raw materials, energy and labour, are not the result of free market forces in China, since they are affected by substantial government intervention within the meaning of article 2(6a)(b) of the Basic Anti-Dumping Regulation. On that basis, the Commission concluded that it was not appropriate to use domestic prices and costs to establish normal value and consequently proceeded to construct the normal value exclusively on the basis of corresponding costs of production and sale in an appropriate representative country. The Commission considered Mexico to be the most appropriate representative country since it has a substantial production of the product under review, a complete set of data available for all factors of production, manufacturing overheads, SG&A and profit and a higher level of social and environmental protection.

Temporary suspension of EU GSP preferences for Cambodia

In February 2019, the European Commission launched a procedure that could lead to the temporary suspension of Cambodia’s preferential access to the EU market under the EBA trade scheme. The Commission did so on the grounds that there is evidence of serious and systematic violations of core human rights and labour rights in Cambodia. The aim of the Commission’s action is to improve the situation for the people on the ground by getting Cambodia to comply with its obligations under the core United Nations (UN) and International Labour Organization (ILO) Conventions.

Further developments in the EU-US WTO Boeing-Airbus dispute

On 28 March 2019, the WTO Appellate Body ruled that the US had failed to remove the massive and trade distorting subsidies that it had been granting to Boeing. On 9 April 2019, the US proposed to impose US$11 billion tariffs in retaliation for the EU’s illegal aid to Airbus. On 11 April 2019, the DSB of the WTO adopted the reports of the Appellate Body. The decision marked the final step in the compliance proceedings launched in 2012 in this long-running dispute. On 17 April 2019, the European Commission launched a public consultation on a preliminary list of products from the US on which the EU may take countermeasures in the context of the Boeing dispute. The list covers a range of items, from aircraft to chemicals and agri-food products, that overall represent around US$20 billion of the US’s exports to the EU.

The EU is currently taking steps towards requesting a WTO-appointed arbitrator to determine the exact appropriate level of countermeasures. Once the arbitrator delivers a decision, the EU will prepare a final list and request authorisation from the DSB to take countermeasures against the US.