6 EU trade defence instruments
(a)
(34838)
8493/13
COM(13) 191
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Commission Communication on modernisation of trade defence instruments: Adapting trade defence instruments to the current needs of the European economy
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(b)
(34863)
8495/13
COM(13) 192
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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
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Legal base | (a)
(b) Article 207 TFEU; co-decision; QMV
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Documents originated | 10 April 2013
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Deposited in Parliament | (a) 16 April 2013
(b) 24 April 2013
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Department | Business, Innovation and Skills
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Basis of consideration | EM of 7 May 2013
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Previous Committee Report | None
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Discussion in Council | No date set
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Committee's assessment | Politically important
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Committee's decision | Not cleared; further information awaited
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Background
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.
Codification
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.
Conclusion
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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