Third Report of Session 2013-14 - European Scrutiny Committee Contents

6   EU trade defence instruments




COM(13) 191

Commission Communication on modernisation of trade defence instruments: Adapting trade defence instruments to the current needs of the European economy


COM(13) 192

Draft Regulation amending Council Regulation (EC) No. 1225/2009 on protection against dumped imports from countries not members of the European Community and Council Regulation (EC) No. 597/2009 on protection against subsidised imports from countries not members of the European Community

Legal base(a) —

(b) Article 207 TFEU; co-decision; QMV

Documents originated10 April 2013
Deposited in Parliament(a) 16 April 2013

(b) 24 April 2013

DepartmentBusiness, Innovation and Skills
Basis of considerationEM of 7 May 2013
Previous Committee ReportNone
Discussion in CouncilNo date set
Committee's assessmentPolitically important
Committee's decisionNot cleared; further information awaited


6.1  The Commission comments that, although the EU benefits greatly from free trade and open global markets, unfair trading practices by some partners and third country exporters can be prejudicial to its industry, and that trade defence instruments — comprising measures against dumped and subsidised imports, and a safeguard instrument — are important in enabling companies to react to such practices. It also notes that the current instruments, which were introduced in 1995 to implement the conclusions of the World Trade Organisation (WTO)'s Uruguay round, have remained largely unchanged, since when the economic environment has changed significantly. The Commission therefore took the view in 2010 that the instruments should be reviewed after the conclusion of the current Doha negotiations, but, as these have stalled, it has now carried out this review. The results of this are set out in a Communication (document (a)), which is accompanied by a draft Regulation (document (b)), intended to give legal effect to those conclusions.

The current documents

6.2  The Communication notes that the current anti-dumping and anti-subsidy measures (set out in Council Regulations (EC) Nos. 1225/2009 and 597/2009 respectively) are based on the rules of the WTO, which allow Members to address unfair trading practices by exporting countries to restore a level playing field, and that, in such cases, the affected EU industry can lodge a complaint with the Commission, providing evidence of the unfair practice and injury caused. If the complaint contains sufficient evidence, an investigation is opened in which all parties concerned are invited to participate, and, if this confirms the allegations made, a provisional anti-dumping or anti-subsidy duty will be imposed by the Commission, followed by a definitive duty imposed by the Council, if the facts finally established confirm this is necessary. Such a duty would normally remain in force for five years (though it may be reviewed or renewed).

6.3  In the light of the representations it has received, the Commission is now proposing the following changes.

Transparency and predictability

6.4  The Commission sees greater transparency as a priority, and is proposing that there should be:

  • prior disclosure two weeks before the intended imposition of provisional anti-dumping and anti-subsidy measures; and
  • advance notice where provisional measures are not to be imposed.

6.5  These changes would require amendments to the relevant legislation, but the Commission also proposes to issue guidelines on four core technical aspects of an investigation — calculation of the injury margin, the choice of analogue country in cases concerning imports from non-market economy countries, the test for determining the EU interest, and the duration of measures and expiry reviews.

Dealing with threats of retaliation

6.6  The Commission notes that EU producers are often reluctant to lodge a complaint, or may withdraw from an investigation, because they fear retaliation, and thus be prevented from exercising their rights under EU and WTO law, and that the number of such threats is increasing. In order to address this, the Commission proposes that the two Regulations should be amended to enable it to carry out an ex-officio investigation when EU producers are exposed to threats of retaliation, and that there should be an obligation on EU producers of the like product to cooperate in any such investigation.

Effectiveness and enforcement

6.7  The Commission notes that the circumvention of trade defence mechanisms is a growing problem, and that improved monitoring of trade flows can help to detect this. It therefore says that, where it is satisfied that such practices appear to be taking place, it will open an ex-officio investigation. It also addresses the current situation under which the EU deviates from minimum WTO requirements by imposing measures at a lower level than the antidumping/subsidy margin if that is sufficient to remove the injury to the EU industry (the "lesser duty" rule). It suggests that this approach is not appropriate where it encourages governments to continue subsidies, or where a country interferes with trade in its raw materials for the benefit of downstream users, and it proposes to amend the two Regulations so that the lesser-duty rule would not be applied in such cases.

Facilitating cooperation

6.8  The Commission notes that its collection of information in connection with trade defence investigations can be burdensome for participating companies, and discourage cooperation. It therefore proposes that the timescale for providing information required to establish the EU interest should be extended; that the procedures for refund applications should be simplified; and that more support and information should be provided for small and medium sized enterprises (SMEs) involved in a trade defence proceeding.

Optimising review practice

6.9  The Commission proposes:

  • that, where an expiry review initiated shortly before the end of the five period of applicability of a trade defence measure (and extending beyond that period) concludes that the measure should not be renewed, any duty which has continued to be paid after the end of the five year period should be reimbursed;
  • that, whereas expiry reviews do not currently allow for duty levels to be amended, despite possibly significant changes in market conditions in the meantime, it should in future be possible for such a change to be made; and
  • that an interim review should be initiated where the Commission has found that EU producers have been engaging in anti-competitive behaviour.


6.10  The Commission proposes a number of technical amendments in order to bring the legislation into line with current practice or developments and recent jurisprudence. These include the deletion of certain provisions to ensure greater coherence; ensuring that exporters with a zero or de minimis dumping margin in an original investigation will not be subject to any review; allowing exemptions also for related parties if they are not involved in circumvention practices; clarifying the definition of what constitutes a "major proportion" of the EU industry; and clarifying that the Union interest covers all producers, and not just complainants.

The Government's view

6.11  In his Explanatory Memorandum of 7 May 2013, the Minister of State for Universities and Science at the Department for Business, Innovation & Skills (David Willetts), says that during the Commission's consultation in 2012, the Government consulted a number of interested parties, during which a diverse, and in some cases opposed, set of views were expressed, although a common area of agreement was the desire for trade defence investigations conducted by the Commission to be more transparent.   He adds that, following the publication of these latest proposals, the Government has invited further views from UK stakeholders.

6.12   In the meantime, the Minister says the Government welcomes and supports the modernisation of EU trade defence instruments, where its priority will be a balanced package, in which the EU regime takes account of the realities for UK business of operating in a global economy, with trade defence action tackling genuinely distorting behaviour. More specifically, he says that the Government welcomes the proposals to increase transparency, but has strong reservations about those to limit the use of the lower duty rate as this is a cornerstone of the EU's "trade defence" regime.

6.13  The Minister says that, although the Commission has prepared an impact assessment, he does not believe this provides a full and comprehensive cost-benefit analysis, but he adds that the Government will be preparing its own Impact Assessment of the proposals, and suggests that the main benefits are likely to come from improved transparency and predictability, whilst the main costs are likely to arise from improved effectiveness and enforcement. In particular, he believes the proposal to remove the lesser duty rule from cases involving subsidies and raw materials distortions may, depending on the circumstances, have a significant impact, in increasing the average level of duty imposed in anti-dumping cases.


6.14  These documents deal with an important subject, and, whilst much of what is proposed appears to be sensible, we note that the Government has expressed reservations about the removal of the lesser duty rule in certain circumstances, and also that it is seeking further views from UK stakeholders and preparing an Impact Assessment. Consequently, whilst we are reporting the documents to the House, we propose to hold them under scrutiny, pending receipt of that Assessment and the progress of the negotiations, particularly with regard to the lesser duty rule.

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Prepared 3 June 2013