The European Union frequently imposes anti-dumping duties on products dumped into the EU market when there is injury to the Union industry of the product in question.
Duties can only be imposed where there has been a thorough investigation lasting 15 months. The investigation starts with a complaint from the Union producers. It must be determined that there is dumping by the exporting producers, injury to the Union industry, that the dumping is causing the injury and that it is in the Union interest to take action to counter the unfair trade practice.
Many of the measures imposed by the Union are challenged before the EU Courts in Luxembourg, first before the General Court (the EU court of first instance) and, less often, on appeal to the European Court of Justice (the EU Supreme Court).
In this note we examine an application by a Chinese exporting producer of tartaric acid against a Union measure imposing an anti-dumping duty of 13.1% on its exports of that product to the Union market. The Case is as much about ensuring that parties to investigations get a fair hearing than about the details of EU anti-dumping law.
On 1 June 2017, the General Court annulled, insofar as the applicant is concerned, the EU anti-dumping Regulation on tartaric acid imported from China.
The ruling was the result of an action for annulment of the Council implementing regulation (EU) No 626/2012 amending Implementing Regulation (EU) No 349/2012 (‘the contested Regulation’). The applicant is a Chinese producer of tartaric acid, Changmao Biochemical Engineering Co. Ltd.
The EU investigation, initiated on 29 July 2011, was not a new investigation but what is known as a partial interim review. This partial review was limited to the examination of margin of dumping in relation to two Chinese producers, including the applicant.
The Commission and Changmao disagreed as to whether the main raw material, i.e. benzene, was purchased at a market price in China. The Commission found that the price of benzene in China was between 19% and 51% lower than in Europe and the USA.  The applicant submitted that the benzene cost used by the Commission was produced with petroleum in international markets while Changmao benzene is produced out of coke.
On 26 June 2012, the Council adopted the contested Regulation which increased the anti-dumping duty of the applicant from 10.1% to 13.1%. This Regulation was challenged by the applicant at the General Court in Luxembourg.
The Court basically upheld the applicant’s claim.
The applicant alleged that the construction of the normal value was affected by a violation of the rights of defence. The Commission did not provide any information on the origin of the prices used to compare the tartaric acid produced in China and in the third analogue country so as to calculate the normal value. The Commission had actually used the prices of both Chinese exporters that had cooperated in the investigation. This was only revealed at the Court hearing. The Commission argued that it could not disclose that information as it was about the price of a competitor.
The Court held that a reconciliation must be made between the obligation to provide information and the obligation to respect confidential information.
So as to claim successfully that the rights of defence have not been complied with, an applicant must show that it cannot be totally ruled out that the outcome would have been different had the rights of defence been respected. In this case, the Court found that this test was met because the Commission refused to disclose the information on the normal value which would have allowed the applicant to verify that no significant error existed..
The Court added that, pursuant Article 20(2) of the basic Anti-Dumping Regulation and of the rights of the defence, “the institutions should in principle have granted the applicant access to the information requested on the price difference between DL tartaric acid and L+ tartaric acid, given that they had not identified a valid reason justifying that refusal in due time”.
The Court referred to the Jinan case in this regard, concluding that the refusal to disclose the information cannot be based on arguments alleged during the oral procedure. In this sense, the infringement of the right of defence must be assessed in light of the arguments provided during the investigation and not on arguments given during the oral proceeding.
On that basis, the General Court annulled the contested Regulation as regards Changmao.
Finally, and as regards another point of relevance, the Court held that the lack of VAT refund of 17% on benzene export was “capable of contributing to distorting the price of benzene” in China. The Court found that this sort of State interference which reduces the purchase price of benzene for domestic producers could not be considered as insignificant.
As a consequence of this case, on 7 September last, the Commission reopened the investigation as regards Changmao so as to correct the irregularity and implement the ruling. It is most likely that Changmao will still be subject to an anti-dumping duty but the amount is likely to be lower.