Introduction

Companies the world over face a wide array of obstacles to conducting cross border business and trade - obstacles ranging from anti-dumping duties to specific provisions applicable to the sector in which they do business. Frequently these barriers contravene WTO or other international trade law obligations and commitments. Such trade rules for example prohibit discrimination on the grounds of nationality in the case of foreign investment and public tenders, they outlaw customs barriers on consumer goods imposed for arbitrary or sham reasons of public health, they forbid tax discrimination, and restrict the use of trade sanctions and other protectionist measures.

In that context, this briefing provides an overview of the main issues and procedures in European Union (EU) anti-dumping and anti-subsidy law and a brief introduction to other measures restricting access to the EU market. In the current economic climate, with protectionist trends on the rise, business in particular cannot afford to remain oblivious of these key areas of EU trade practice.

Anti-dumping

General Introduction

Dumping is often understood to occur whenever excessively cheap or below-cost imports are made available on a market, but the reality is a bit more nuanced. Dumping occurs when a company sells its products at a cheaper price on the export market when compared with its own domestic market. The EU anti-dumping regulation, Council Regulation No 1225/2009, regulates at EU level the procedure for the imposition of anti-dumping duties.

Conditions for the imposition of EU anti-dumping duties

Council Regulation No 1225/2009 permits the EU to impose anti-dumping duties where the following four conditions are satisfied:

  • a finding of dumping: the export price at which the product is sold on the EU market is shown to be lower than the price on the producer’s home market (the so-called “normal value”);
  • a material injury to Union industry: the imports have caused damage to a substantial part of the relevant industry within the EU, such as a loss of market share, reduced prices for EU producers and resulting pressure on production, sales, profits, productivity, etc.;
  • a causal link between the dumped imports and the material injury; and

the interests of the EU will be served by the imposition of measures: the economic costs for the EU of imposing measures must not be disproportionate to the benefits. In particular on this issue, exporters, EU importers, EU users and consumers - generally opposed to the imposition of anti-dumping duties - will be invited to present their views.

If these conditions are met, EU anti-dumping duties will be imposed upon all exports of the product concerned originating in the exporting countries concerned. These duties will be added to normal customs duties, if any. They must not however exceed the “dumping margin” (the difference between the price on the home market (the normal value), and the price charged on the EU market), or, if it is smaller than the dumping margin, the “injury margin” (the difference between the price charged on the EU market by the exporters and the EU average price).

Anti-Dumping Procedure

The complaint

Where the EU 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 Commission. The EU industry in this context refers to EU producers of the particular product being dumped that are injured by the dumping. A complaint must be supported by a significant amount of relevant EU producers. Collectively, these companies must produce at least 25 per cent of the total EU output of the product being dumped.

A complaint must contain information showing that a certain product originating in a third country is being exported to the EU at dumped prices, and that this dumped product is causing injury to the Union industry. Evidence (e.g. invoices, price offers, publications in specialised press, official statistics, etc.) will be required to support the allegations made in the complaint.

Investigation proceedings

The Commission has 45 days to examine the complaint, consult EU Member States and decide whether or not there is enough evidence to merit a formal investigation.

An investigation normally takes 15 months. During this period, the Commission investigates the matter in depth (comparing and verifying on-the-spot data provided by all participating parties), and consults further with EU Member States.

Within 9 months, the Commission generally imposes provisional duties. These duties consist in the provision of bank guarantees for the value of the duties that importers must provide when importing the product. Thereafter, the EU Council of Ministers has the authority to decide whether to impose definitive duties and order the collection of the provisional duties.

Definitive duties are valid for five years before they expire. If, however, EU producers demonstrate that the removal of duties is likely to lead to further dumping and the renewed imposition of duties, the Commission may reopen its investigation (an “expiry review”), and extend the protective measures beyond the initial five year period.

Who is responsible for investigating anti-dumping complaints?

In the European context, the European Commission is responsible for investigating complaints and assessing whether they are justified. The Commission can impose provisional measures, while it is the Council of Ministers (a body composed of EU Member State government representatives) which imposes definitive anti-dumping duties following a recommendation by the Commission.

Judicial challenge

An EU Regulation imposing anti-dumping duties may be challenged in the EU General Court (formerly the Court of First Instance), and the WTO dispute settlement procedure may be used to settle disputes between WTO Member States (i.e. the EU and the exporting countries concerned).

Confidentiality

Confidentiality is a central concern with anti-dumping complaints mainly for two reasons. First, the companies involved in filing a complaint are typically competitors. Therefore, the exchange of business secrets or confidential information between these operators could constitute an infringement of competition law. Second, an investigation relating to dumping practices focuses on the period immediately prior to the initiation of proceedings. If it is disclosed that a complaint is being contemplated, exporters will naturally increase their prices in order to decrease the risk of anti-dumping measures being imposed on them.

Accordingly, the vast majority of information is provided to the Commission on a confidential basis. The Commission will not reveal confidential information without a specific permission from the supplier of the information.

Exporting non-market economy countries

The complainant must demonstrate that exporting countries export - as an average - at a price lower than the average domestic price (the normal value). Information must therefore be provided concerning average domestic prices for all countries targeted by the complaint.

Where exports emanate from a non-market economy, the complaining parties must provide the Commission with an “analogue country”, the average domestic prices (or estimated costs of production) of which will be compared to the non-market economy country average export prices in order to assess the existence of a dumping margin.

Anti-subsidy

Other trade defence instruments put in place by the EU include Council Regulation No 597/2009 on protection against subsidised imports from countries not members of the European Community.

Under Council Regulation 597/2009, the EU authorities are entitled to impose countervailing measures on subsidised imports causing material injury to industry in the EU. The application of these measures requires the existence of economic contributions from public bodies to the company or industry under investigation. Like anti-dumping measures, countervailing measures are normally imposed initially for a provisional period.

Anti-subsidy measures target subsidies made available to manufacturers from third countries (i.e. countries not members of the EU) by their public authorities if these subsidies distort trade by reducing production costs or by cutting the prices of exports to the EU.

Investigation proceedings

Again proceedings may be initiated by a written complaint to the European Commission on behalf of the relevant EU industry sector. The complainant will be deemed to act for the Union industry if:

  • the production of the companies supporting the complaint accounts for more than 50 per cent of EU producers expressing either support for or opposition to the complaint; and
  • the production of the companies supporting the complaint accounts for 25 per cent or more of total EU production of the product concerned.

The Commission must then evaluate whether there is sufficient evidence of subsidisation, injury and causality to justify pursuing the matter. Following the initiation of proceedings, the Commission undertakes an investigation and if necessary, provisional measures (secured by a guarantee) will be imposed, for a maximum period of four months.

Competence to impose definitive countervailing measures on the subsidised company lies with the Council.

Substantive elements to be established by the Commission

As with anti-dumping, the European Commission will have to establish four elements before countervailing measures can be imposed on subsidised imports:

  • subsidisation: the imports concerned must benefit from countervailable subsidies;
  • injury: the subsidised imports cause or threaten to cause material injury to the EU industry producing a like product;
  • causality: there must be a causal link between the alleged subsidisation and the injury; and
  • Union interest: the imposition of countervailing measures must be in the interest of the EU. Again, this requires a balancing of competing interests and a consultation of various parties with an interest in the outcome of the investigation.

Other measures restricting access to the EU market

Anti-dumping and anti-subsidy measures aside, imports into the EU from third countries may be made subject to safeguard measures in the form of quantitative restrictions or other restrictive arrangements.

Additionally, companies operating globally may need to comply with very specific and targeted legal provisions, applicable to the sector in which they do business, if they are to market their products in the EU. In that respect, the EU has put in place a plethora of measures, varying from one industry to the next, requiring the prior authorisation of products or imposing particular labelling requirements, etc.

By way of particular example, the EU recently implemented the REACH Regulation on chemicals and their safe use (Regulation No 1907/2006 of the European Parliament and of the Council). The aim of REACH is to improve the protection of public health and the environment by according greater responsibility to industry for the management of risks associated with the production of chemicals. Among other matters, manufacturers and importers of chemical products are required to gather and disseminate information on the properties of their chemical products, which allows for their safe handling, and to register the information concerned in a central database run by the European Chemicals Agency (ECHA).