Dumping is often seen to relate to any cheap or below-cost imports, but the reality is more complicated. Dumping occurs when a company sells its products at a cheaper price on the export market than on its own domestic market. The EC anti-dumping Council Regulation No 384/96 (the Basic Regulation) regulates at EU level the procedure for the imposition of anti-dumping duties.
This paper provides a very brief overview of the main issues and procedure under the Basic Regulation.
Conditions to impose EC antidumping duties
The EC is allowed to impose anti-dumping duties if the following conditions are satisfied:
- a finding of dumping: the export price at which the product is sold on the Community market is shown to be lower than the price on the producer's home market (the so-called “normal value”)1;
- a material injury to Community industry: the imports have caused damage to a substantial part of the industry within the EC, such as loss of market share, reduced prices for producers and resulting pressure on production, sales, profits, productivity, etc.2;
- a causal link between the dumped imports and the material injury: there should be no other major causes that could explain the decline of the Community industry’s economic situation3; and
- the interests of the Community: the economic costs for the Community for taking measures must not be disproportionate to the benefits4. In particular on this issue, exporters, EC importers, EC users and EC consumers - generally opposed to the imposition of any antidumping duties - are asked to present their views.
If these conditions are met, EC antidumping duties will be imposed upon all exports of the product concerned originating in the exporting countries concerned. These duties will be added to the normal customs duties, when existing. They must not exceed the dumping margin (the difference between the price on the home market, the so-called “normal value”, and the price charged on the EC market), or, if it is smaller, the injury margin (the difference between the price charged on the EC market by exporters and the EC average price)5.
When the Community industry in a given sector considers that dumped imports from non-EU countries are causing it material injury, it can submit a complaint to the European Commission6. “Community industry” refers to European Community producers of the particular product being dumped that are being injured by this dumping. A complaint must be supported by a significant amount of European Community producers. Collectively, these companies must produce at least 25 per cent of the total European Community production of the product being dumped.7
A “complaint” is a document which contains information showing that a certain product originating in a third country is being exported to the European Community at dumped prices, and that this dumped product is causing injury to the Community industry. Evidence (e.g. invoices, price offers, publications in specialised press, official statistics, etc.) will support the allegations made in the complaint.
Investigation - proceeding
The Commission has 45 days to examine the complaint, consult the EC Member States and decide whether or not there is enough evidence to merit a formal investigation.
The investigation normally takes 15 months. During that period, the Commission investigates the matter (comparing and verifying on-the-spot data provided by all participating parties), and the EC Member States are consulted.
Within 9 months, the Commission generally imposes provisional duties8. These duties consist in the provision of bank guarantees for the value of the duties9 that importers must provide when importing the product. After that, the Council of Ministers has the authority to decide to impose definitive duties and order the collection of the provisional duties to the level calculated for the definitive duties10.
Definitive duties are valid for five years before they expire. If, however, Community producers demonstrate that removal of duties is likely to lead to renewed duties and dumping, the Commission may reopen its investigation, and extend the protection beyond the initial period of five years.
Who is responsible for investigating antidumping complaints?
The European Commission is responsible for investigating complaints and assessing whether they are justified11. The Commission can also impose provisional measures, while it is the Council of Ministers which imposes definitive anti-dumping duties on the recommendation of the Commission12.
A Regulation imposing anti-dumping duties may be challenged in the European Court of First Instance, and the WTO dispute settlement procedure may be used to settle disputes between WTO Member States (i.e. the Community and the exporting countries concerned).
Antidumping complaints need a great deal of confidentiality mainly for two reasons. First, complaining industries are competitors and no business secret or confidential information should be exchanged, which would constitute an infringement of competition law. Second, the investigation relating to dumping practices focuses on the closest period of one year before the lodging of the complaint. If the mere existence of the contemplation of a complaint is disclosed, exporters would automatically increase their price in order to decrease the risk of antidumping measures.
The vast majority of information is provided to the Commission on a confidential basis. The Commission will not reveal any confidential information without specific permission from its supplier13.
Exporting “market economy” countries
As explained above, the complainant must demonstrate that exporting countries export - as an average - at a price lower than the average domestic price (the so-called “normal value”). Information must therefore be provided concerning average domestic price for all countries targeted by the complaint.
Where exports relate to a non-market economy, the complaining parties must provide the Commission with a so-called analogue country, average domestic price (or estimated costs of production) of which will be compared to the non market economy country average export price in order to assess the existence of any dumping margin.