Changes to the EU anti-dumping and anti-subsidy legislation seem likely following a proposal from the European Commission. Eric Davies reports.

The recent proposal from the European Commission seeks to amend two existing acts: EU Regulation 2016/1036 on protection against dumped imports from countries that are not members of the EU (the Basic Anti-dumping Regulation) and EU Regulation 2016/1037 on protection against subsidised imports from countries that are not members of the EU (the Basic Anti-subsidy Regulation).

Trade defence

The move aims to ensure that the EU’s trade defence instruments are able to cope with current realities in the international trading environment, particularly overcapacities which can lead exporters to dump their products on the EU market. Dumping can cause damage to industries in Europe, including job losses and factory closures.

At the same time, EU rules on trade defence must respect the Union’s international obligations within the legal framework of the World Trade Organization (WTO).

Dumping

The Commission has proposed a new method for calculating dumping on imports from countries where there are significant market distortions, or where the state has a pervasive influence on the economy.

Under current EU rules, dumping is generally calculated by comparing the export price of a product to the EU with the domestic prices or costs of the product in the exporting country.

The Commission’s proposals would retain this approach but would also introduce a new, country-neutral methodology. The new approach would apply in the same way to all WTO members and take into account significant distortions in certain countries due to state influence in the economy.

Analogue country procedure

Under the proposals, members of the WTO would no longer be subject to the analogue country procedure. (The procedure is used to model the costs of production in a non-market economy by substituting data from a country in which the general capacity and type of production closely approximates that of a country under investigation. It thus allows investigators to establish what production costs of a particular product might be if it were made in a country where market economy conditions prevailed.)

Discrimination in favour of domestic companies and the independence of the financial sector would be among the criteria used by the Commission to determine distortions in trade.

The Commission’s proposals foresee the analogue country methodology being reserved for use in investigations concerning non-market economy countries that are not members of the WTO.

An impact assessment carried out by the Commission suggests that the new methodology would result in anti-dumping duties being imposed at a level broadly equivalent to the current rate.

Complaints

It will be up to EU firms to file complaints when unfair trade is suspected. The Commission does, however, intend to compile reports on specific countries or sectors, describing the particular circumstances and highlighting any market distortions. Such reports would then become part of any anti-dumping investigation into a country or sector. EU firms would be able to use information in the reports to support their case when lodging a complaint or requesting a review.

Subsidies

When anti-subsidy investigations are launched, the actual magnitude of subsidies is not always clear says the Commission. Investigations sometimes reveal that exporters have benefitted from subsidies that would not otherwise have come to light. The changes proposed by the Commission therefore seek to ensure that the value of any additional subsidies found during an investigation can be included in the relevant anti-subsidy measure.

Further information

Published as COM(2016) 721, the draft Regulation amending EU Regulation 2016/1036 and EU Regulation 2016/1037 is available at the EUR-Lex website.

Additional information on EU trade defence issues is available at the EC Trade website.

Last reviewed 18 November 2016