The EU sets the rules for importation of products from non-EU countries for all EU Member States. This includes so-called "trade defence" measures such as anti-dumping, anti-subsidy and safeguard measures. Such trade defence measures primarily aim to protect the EU's economic interests by countering unfair pricing practices from foreign exporters, such as selling below normal value or at subsidised prices. Trade defence measures are allowed within a framework set by the WTO and usually take the form of additional, and potentially very high, customs duties on a particular product imported from countries such as China, Russia or Vietnam.
Today, many EU companies invest in production facilities outside the EU for import into the EU or operate supply chains that involve outsourcing to subcontractors that operate beyond the EU's borders. These businesses operate on an international scale but nevertheless maintain significant operations and employment within the EU. Because production takes place outside the EU, however, these companies can nevertheless be affected by trade defence measures. Such measures may make a previous decision to move production outside the EU uneconomical. By consequence, trade defence measures can undermine the stability and predictability that such decisions normally require.
The fact that trade defence measures increasingly have a negative effect on EU companies raises the question as to whether it is genuinely in the EU's economic interest to apply such measures. This question has caused considerable disagreement between, on the one hand, free trade oriented Member States, such as the UK, the Netherlands and the Scandinavian countries, and, on the other hand, Member States where production has remained a more important part of the economy, such as Spain and Portugal. This became particularly clear when the EU needed to take a decision on the imposition of anti-dumping duties on shoes from China in the second half of 2006.