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23.2.2.  EU's common trade defence

    As seen above, the European Union can introduce surveillance and safeguard measures in the framework of the common rules for imports when imports at prices viewed as normal are causing or risk causing serious injury to European producers. In cases where the export price is lower than the normal value of a like product (dumping), the EU can take trade protection measures, notably through the application of anti-dumping duties. European rules being compatible with those of the World Trade Organisation, economic operators must comply with only one set of rules for imports into the EU [see sections 23.2.1 and 23.4]. These rules apply automatically in the new States acceding to the EU, as of May 2004 [Commission notice]. On the jurisdictional level, anti-dumping and anti-subsidy cases must be brought before the Court of First Instance [Decision 94/149].

    According to the Regulation on protection against dumped imports from countries not members of the EC, anti-dumping duty may be applied to any dumped product whose release for free circulation in the EU causes injury [Regulation 2016/1036]. A product is considered as having been dumped if its export price to the EU is less than a comparable price for the like product, in the ordinary course of trade, as established for the exporting country. The term like product means a product that is identical in all respects or has characteristics closely resembling those of the product under consideration. In order to determine the dumping, the normal price and the dumped price must be defined and these two values must then be compared. It should be noted that these definitions as well as the anti-dumping procedures are, after the Uruguay Round, similar in the EU and in other WTO countries.

    An investigation to determine the existence, degree and effect of any alleged dumping is initiated upon a written complaint submitted to the Commission or to a Member State by any natural or legal person, or any association acting on behalf of the European industry. Where, in the absence of any complaint, a Member State is in possession of sufficient evidence of dumping and of injury resulting therefrom for the European industry, it must immediately communicate such evidence to the Commission. The investigation is conducted by the Commission in cooperation with the Member States [see e.g. Regulation 275/2004]. It covers both dumping and injury.

    Normal value is generally based on the prices paid or payable, in the ordinary course of trade, by independent customers in the exporting country. Where there are no or insufficient sales of the like product in the ordinary course of trade, or where such sales do not permit a proper comparison, the normal value of the like product is calculated on the basis of the cost of production in the country of origin plus a reasonable amount for selling, general and administrative costs and for profits. In the case of imports from non-market economy countries, normal value is determined on the basis of the price or constructed value in a market economy third country, or the price from such a third country to other countries, including the EU, or where these are not possible, on any other reasonable basis.

    The export price is the price actually paid or payable for the product sold for export to the European Union. Where there is no export price or where it appears that the export price is unreliable because of association or a compensatory arrangement between the exporter and the importer or a third party, the export price may be constructed on the basis of the price at which the imported product is first resold to an independent buyer or on any reasonable basis. In such cases, allowance must be made for all costs incurred between import and resale (transport, insurance, general expenses), including duties and taxes, and for a reasonable profit margin.

    A fair comparison must then be made between the export price and the normal price. This comparison must be made at the same level of trade and in respect of sales made at as nearly as possible the same time and with due account taken of other differences which affect price comparability. Where the normal value and the export price as established are not taken on such a comparable basis due allowance, in the form of adjustments, must be made in each case for differences in factors which are claimed, and demonstrated to affect prices and, therefore, price comparability, notably: the physical characteristics of the product concerned; import charges and indirect taxes; discounts, rebates and quantities; transport, insurance, handling and ancillary costs; and the cost of any credit granted.

    The dumping margin is the amount by which the normal value exceeds the export price. Where dumping margins vary, a weighted average margin may be established. The determination of the serious injury caused to the European industry or the threat of such injury must be based on positive evidence and involve an objective examination of both (a) the volume of the dumped imports and the effect of the dumped imports on prices in the European market for like products, and (b) the consequent impact of these imports on the European producers of the like products.

    Provisional measures may be taken by the Commission, after consultation with the Member States, no sooner than 60 days but not later than nine months from the initiation of the proceedings. The final conclusions of the investigation must be adopted within a further six months. The amount of the provisional anti-dumping duty must not exceed the margin of dumping as provisionally established. Investigation may be terminated without the imposition of provisional or definitive duties upon receipt of satisfactory voluntary undertakings from the exporter to revise his prices or to cease exports to the area in question at dumped prices.

    Where a provisional duty has been applied and the facts established show that there is dumping and injury, the Council decides, irrespective of whether a definitive anti-dumping duty is to be imposed, what proportion of the provisional duty is to be definitively collected. If the definitive anti-dumping duty is higher than the provisional duty, the difference must not be collected. If the definitive duty is lower than the provisional duty, the duty must be recalculated. Provisional or definitive anti-dumping duties must be imposed by Regulation, and collected by Member States in the form, at the rate specified and according to the other criteria laid down in the Regulation imposing such duties.

    The rules on protection against subsidised imports from countries not members of the European Union are also established by Regulation [Regulation 2016/1037]. Here again the European legislation is compatible with WTO rules and, therefore, business must comply with only one set of rules. A countervailing duty may be imposed for the purpose of offsetting any subsidy granted, directly or indirectly, for the manufacture, production, export or transport of any product whose release for free circulation in the EU causes injury. A subsidy is deemed to exist if: 1) there is a financial contribution by a government or by a private body entrusted by it (direct transfer of funds, loan guarantees, fiscal incentives, etc.); and 2) a benefit is thereby conferred.

    Subsidies, which are not specific to an enterprise or industry or group of enterprises or industries, cannot be subjected to countervailing measures. Even when they are specific, subsidies cannot be subjected to countervailing duties, if they are given: for research activities; pursuant to a general framework of regional development; to promote adaptation of existing facilities to new environmental requirements. The amount of subsidies to be subjected to countervailing duties is calculated in terms of the benefit conferred to the recipient, which is found to exist during the investigation period. Where all conditions are met, a provisional or definitive countervailing duty is imposed following procedures similar to the ones described above concerning the imposition of anti-dumping duties.

    In December 1994, the Council adopted a Regulation destined to improve European procedures on commercial defence and to ensure the exercise of the Union's rights under international trade rules, in particular those established under the auspices of the World Trade Organisation (WTO) [Regulation 2015/1843]. This Regulation allows the EU to respond to obstacles to trade, i.e. to any trade practice adopted or maintained by a third country in respect of which international trade rules establish a right of action. Thus, following the European examination procedures and after consultation with the Member States, the Commission may take any commercial policy measures which are compatible with existing international obligations and procedures, notably: (a) suspension or withdrawal of any concession resulting from commercial policy negotiations; (b) the raising of existing customs duties or the introduction of any other charge on imports; (c) the introduction of quantitative restrictions or any other measures modifying import or export conditions or otherwise affecting trade with the third country concerned. The Commission has thus initiated procedures concerning e.g.: the US Anti-dumping Act of 1916 and US practices with regard to cross-border music licensing [Notice of 25/02/1997 and Notice of 11/06/1997]; trade practices maintained by South Korea affecting trade in commercial vessels [Notice of 18.08.2000 and Decision 2002/818] and practices followed by India affecting trade in wines and spirits [Notice of 17.09.2005].

    An important trade defence instrument of the EU is related to customs action against goods suspected of infringing certain intellectual property rights, particularly counterfeit and pirated goods [Regulation 608/2013]. As these breaches have been escalating in recent years, notably as regards the methods used by fraud gangs and the internationalisation of traffic, and as other property rights such as geographical indications, designations of origin and new plant varieties are affected, the European legislation has become more stringent [see sections 6.2.4 and 23.4]. It gives customs administrations a legal arsenal enabling them, in collaboration with right holders, to better prevent and control intellectual property right infringements. Action by the customs authorities involves, for the period necessary to determine whether suspect goods are indeed counterfeit goods, pirated goods or goods infringing certain intellectual property rights, suspending release for free circulation in the EU, export and re-export. The measures applicable to goods which have been found to be counterfeit, pirated or generally to infringe certain intellectual property rights aim to deprive those responsible for trading in such goods of the economic benefits of the transaction and penalise them so as to constitute an effective deterrent to further transactions of the same kind.

    Reports on the Union's anti-dumping and anti-subsidy activities supplied by the Commission every year to the Council and Parliament suggest that the European Union makes cautious use of the trade defence instruments. When the instruments are used, they are used with care and self-restraint while ensuring effective protection against unfair trade practices. At the end of 2003, 156 anti-dumping measures and 17 countervailing measures were in force in the EU. Only 0.3% of total imports to the European Union were the subject of anti-dumping and antisubsidy measures. Anti-dumping and/or anti-subsidy duties have recently been imposed, e.g. on imports of solar glass originating in the People's Republic of China [Regulation 2015/588] and on imports of certain stainless steel wires originating in India [Regulation 2015/1019]. In some cases, however, the Commission accepts undertakings offered by countries involved in anti-dumping proceedings [See e.g. decision 2012/629 and decision 2013/423]. As for measures taken by other countries against European exports, 30% of anti-dumping and countervailing measures affecting the EU or its Member States are habitually taken by the United States [COM/2002/484]. A Commission Green Paper on trade defence instruments is aimed at adjusting their use to strengthen Union's competitiveness in a globalised economy [COM/2006/763].

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