EU Trade Defence Law and Practice: An Introduction 3031253299, 9783031253294

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SpringerBriefs in Law Christoph Herrmann · Patricia Trapp

EU Trade Defence Law and Practice An Introduction

SpringerBriefs in Law

SpringerBriefs present concise summaries of cutting-edge research and practical applications across a wide spectrum of fields. Featuring compact volumes of 50 to 125 pages, the series covers a range of content from professional to academic. Typical topics might include: • A timely report of state-of-the art analytical techniques • A bridge between new research results, as published in journal articles, and a contextual literature review • A snapshot of a hot or emerging topic • A presentation of core concepts that students must understand in order to make independent contributions SpringerBriefs in Law showcase emerging theory, empirical research, and practical application in Law from a global author community. SpringerBriefs are characterized by fast, global electronic dissemination, standard publishing contracts, standardized manuscript preparation and formatting guidelines, and expedited production schedules.

Christoph Herrmann • Patricia Trapp

EU Trade Defence Law and Practice An Introduction

Christoph Herrmann Faculty of Law University of Passau Passau, Germany

Patricia Trapp Düsseldorf, Nordrhein-Westfalen, Germany

ISSN 2192-855X ISSN 2192-8568 (electronic) SpringerBriefs in Law ISBN 978-3-031-25329-4 ISBN 978-3-031-25330-0 (eBook) https://doi.org/10.1007/978-3-031-25330-0 © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Contents

1

2

3

The Foundations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 Defining the Notion of “Trade Defence Instruments” . . . . . . . . . . . 1.3 Historical Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3.1 Defensive Measures to Protect Trade . . . . . . . . . . . . . . . . 1.3.2 Offensive Measures to Protect Trade . . . . . . . . . . . . . . . . . 1.4 The Economic and Legal Rationale Underlying the Imposition of Trade Defence Measures . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Academic Literature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14 16 16

The Current Legal Framework Governing the EU’s Trade Defence Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Primary Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 International Economic Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 Secondary Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.1 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.2 Anti-dumping Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.3 Anti-subsidy Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 Safeguard Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4.1 Trade Barriers Regulation . . . . . . . . . . . . . . . . . . . . . . . . . 2.4.2 Enforcement Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Academic Literature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

19 19 22 24 24 26 60 67 68 72 73 73

Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 Competences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.1 Union Competence . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.2 Institutional Competence . . . . . . . . . . . . . . . . . . . . . . . .

75 75 75 76

. . . .

1 1 3 6 6 12

v

vi

Contents

3.2

Procedural Rights of the Parties to the Proceedings and Rule of Law Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Academic Literature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

78 81 81

4

Judicial Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Type of Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Standing Under Article 263 TFEU . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Academic Literature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

83 83 85 85 88 88

5

Perspectives and Current Developments . . . . . . . . . . . . . . . . . . . . . . 5.1 Reforms and Current Developments at the WTO Level . . . . . . . . . 5.2 Reforms and Current Development at the EU Level . . . . . . . . . . . 5.2.1 New Instrument on Foreign Subsidies . . . . . . . . . . . . . . . . 5.2.2 Brexit and Trade Defence . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Academic Literature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

91 91 94 94 97 99 99

Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Publications by the EU Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . European Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . European Parliament . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EU Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Judgments by the European Courts . . . . . . . . . . . . . . . . . . . . . . . . . . . International Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . World Trade Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . European Union . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . WTO Adjudicative Bodies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

101 101 101 102 103 103 113 116 116 116 117 117

Chapter 1

The Foundations

1.1

Introduction

Dating back almost 60 years, the law of the European Union’s (EU) trade defence instruments is one of the oldest components of the trading bloc’s common commercial policy (CCP). Indeed, Article 113 of the 1957 Treaty of Rome had already provided for the then Community’s commercial policy to comprise measures to protect trade such as those to be taken in the event of dumping and subsidisation.1 Likewise, it was in the context of anti-dumping proceedings that the European Coal and Steel Community (ECSC) first assumed its role as a foreign representative for its Member States.2 Furthermore, although sometimes characterized as forming part of the EU’s “autonomous” CCP measures,3 EU trade defence law does not stand in isolation. Its substantive law as well as its administrative aspects have been and continue to be shaped by the applicable requirements of international law, in particular the law of the World Trade Organization (WTO). Another factor having an impact on the trade defence instruments are current developments in the global economy, and the resulting tendency of States to resort to the imposition of measures curbing the influx of foreign goods, with these trade-restrictive measures not always adhering to international law. In the face of the slow recovery of the major Western economies after the global economic and financial crisis of 2007, the use of trade defence instruments against so-called “non-market economy countries” has long gained

1

Article 113 Treaty establishing the European Economic Community (Treaty of Rome), 25 March 1957. 2 Alter and Steinberg (2007), pp. 89–104 (91). 3 García and Khorana (2018), p. 100 et seq., describe autonomous trade policy measures as comprising “all decisions the EU can take autonomously without another country’s approval”. © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 C. Herrmann, P. Trapp, EU Trade Defence Law and Practice, SpringerBriefs in Law, https://doi.org/10.1007/978-3-031-25330-0_1

1

2

1

The Foundations

prominence in the efforts to protect the EU industry against unfair trading practices by third country exporters.4 Similarly, the progressing globalisation and the resultant trend of internationally integrated value chains have had a continued impact on the use of trade defence instruments. Globally integrated value chains partially erode the traditional approach taken in justifying the imposition of measures to protect trade, namely the protection of one’s “domestic” economy against “foreign” companies. Moreover, the rise of multi-national corporations, operating both within the EU and internationally, makes it increasingly difficult to determine whether the imposition of trade defence instruments would serve the interests of the European Union when deciding upon their use. Already in 2006 and in light of this changing environment of international trade, the European Commission (Commission) had initiated a reform process of the EU’s trade defence instruments. After long and protracted negotiations between the Commission, Parliament and the Member States, in 2017 and 2018, the EU’s trade defence framework saw its first comprehensive reform in over 20 years. The amendments made to the basic anti-dumping regulation (BADR) and the basic anti-subsidy regulation (BASR) include new rules on the treatment of non-market economy countries in anti-dumping investigations, and introduced a number of significant changes to both the procedural and the substantive provisions of the basic regulations. The United Kingdom’s withdrawal from the European Union in 2019 (“Brexit”) likewise has a significant impact on the area of trade defence instruments, both for the EU and the United Kingdom. Lastly, it is uncertain whether the WTO Doha Round negotiations, which have come to a standstill again after a brief revival,5 will yield any outcomes with regard to the law of trade defence instruments, which are at the heart of the negotiations. In any event, a consensus as regards the replacement of the use of trade defence instruments by international competition law,6 as often called for by legal scholars, cannot be expected to materialize in the foreseeable future. The change towards a more geoeconomic trade policy making and the concept of open strategic autonomy that is increasingly dominating the EU’s policy, are rather propelling the use of trade defence instruments and lead to the introduction of even new forms, e.g. to fight foreign subsidization hitherto not covered by the trade defence tool box. This work intends to provide the reader with an overview of the current legal framework governing the EU’s trade defence instruments. At the same time, it endeavours to impress upon the reader that EU trade defence law and practice continues to be shaped by a variety of factors, both economic and political. This is evidenced inter alia by the most recent reforms of the EU’s trade defence arsenal,

4 Cf. in particular on the EU’s investigations concerning products originating in the People’s Republic of China: Müller (2016), available at SSRN, https://papers.ssrn.com/sol3/papers.cfm? abstract_id=2665960; Nastoll (2013), pp. 265–279; Vermulst and Gatta (2012), pp. 527–553. 5 Information on the current state of the negotiations can be found at . 6 Cf. e.g. Boscheck (2001), pp. 41–64.

1.2

Defining the Notion of “Trade Defence Instruments”

3

which were each undertaken as a reaction to developments at the WTO-level: the reform to the EU’s Enforcement Regulation in early 2021 was a result of the ongoing blockade of the WTO Appellate Body and other WTO members’ unwillingness to resort to alternative means of dispute resolution available under the Dispute Settlement Understanding (DSU).7 Similarly, while the previous versions of the BADR and the BASR were considered to no longer be reflective of economic reality,8 modifications to the EU’s treatment of the People’s Republic of China (China) in anti-dumping investigations had also become necessary to ensure the continued compatibility of the EU’s approach with WTO law.9 This introduction and a definition of the notion of “trade defence instruments” is followed by a brief overview of the historical development of the EU’s trade defence instruments, and a presentation of the economic and legal rationale underlying the imposition of trade defence measures. The book’s focus lies on the description of the current legal framework governing the EU’s trade defence instruments. This includes the requirements of international economic law as well as EU primary law. The book will then introduce the reader to the secondary law governing the application of the EU’s trade defence instruments, in particular the above-mentioned BADR and BASR as well as safeguard measures and measures under the so-called Trade Barriers Regulation. It will then go on to provide an overview of enforcement mechanisms and the judicial review of trade defence measures. Lastly, it will present reforms and current developments at both the WTO and the EU level.

1.2

Defining the Notion of “Trade Defence Instruments”

As visible from the 1957 Treaty of Rome and more particularly, Article 3 (a) of the Treaty, the introduction of a common commercial policy (CCP) formed part of the European Economic Community’s (EEC) activities from the very beginning of European integration. As indicated above, according to Article 113 (1) EEC Treaty, the Community’s common commercial policy was to be formulated on the basis of uniform principles following the end of the transitional period, and included “measures to protect trade, for example in the event of dumping and subsidies”. The wording of the norm has not undergone significant changes during the European integration process: The first two sentences of what is now Article 207 (1) TFEU are identical to those of Article 113 (1) EEC Treaty with regard to the references to trade defence instruments contained therein. Instead, the main innovations brought about by the Treaty of Lisbon relate to the integration of the EU’s common commercial

7

Cf. below p. 72. European Commission, Europe’s Trade Defence Instruments: Now Stronger and More Effective (June 2018), available at https://trade.ec.europa.eu/doclib/docs/2018/june/tradoc_156921.pdf. 9 Cf. below p. 28 et seq. 8

4

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The Foundations

policy in the wider framework of the trading bloc’s external policies, most notably through Article 21 TEU and Article 205 TFEU and the extensive catalogue of partly non-commercial objectives to be pursued by the EU in its external relations contained therein. Moreover, since the entry into force of the Treaty of Lisbon, the CCP is explicitly included among the exclusive competences of the European Union (cf. Article 3 (1) (a) TFEU).10 While limited, the impact of these changes should on no account be underestimated. This is particularly so when viewed in the context of the re-adjustment of the “institutional balance” between the EU’s institutions in defining and implementing the bloc’s trade policy.11 In this work, the term “trade defence instruments” is used to denote “measures to protect trade” as referenced in Article 207 (1) TFEU. In addition to measures taken against dumping or subsidies mentioned there by way of example—and which form the most relevant parts of the EU’s trade defence arsenal, both as regards their practical relevance12 and the academic interest they attract—the EU’s trade defence legislation further encompasses two regulations laying down the basic rules for the imposition of safeguard measures.13 Under these regulations, the Commission may restrict the volume of imports. The so-called Trade Barriers Regulation (TBR) permits the EU industry and Member States to submit a complaint to EU institutions concerning alleged trade barriers put in place by third States that are contrary to international trade rules.14 Similarly, the so-called Enforcement Regulation deals with violations of international trade rules by third countries.15 Where the EU is then authorized to suspend its commitments under international trade rules by an international adjudicative body (such as those established under the WTO DSU), the Enforcement Regulation sets out the procedure to be adhered to. Of the instruments

10 On the amendments to the EU’s CCP by the Treaty of Lisbon cf. Bungenberg (2010), pp. 123–151. 11 On the actors shaping the EU’s CCP cf. Dederer (2013), pp. 87–105. 12 Cf. European Commission, Statistics on Anti-dumping, Anti-subsidy and Safeguard Measures Covering 2021 (2021): on 31 December 2021, the EU had 111 anti-dumping measures in force, but only 19 countervailing and one safeguard measure, available at https://trade.ec.europa.eu/doclib/ docs/2022/february/tradoc_160048.pdf. 13 Regulation (EU) 2015/478 of the European Parliament and of the Council of 11 March 2015 on common rules for imports; Regulation (EU) 2015/755 of the European Parliament and of the Council of 29 April 2015 on common rules for imports from certain third countries, OJ EU 2015 L 83/16. 14 Regulation (EU) 2015/1843 of the European Parliament and of the Council of 6 October 2015 laying down Union procedures in the field of the common commercial policy in order to ensure the exercise of the Union’s rights under international trade rules, in particular those established under the auspices of the World Trade Organization, OJ EU 2015 L 272/1. 15 Regulation (EU) No 654/2014 of the European Parliament and of the Council of 15 May 2014 concerning the exercise of the Union’s rights for the application and enforcement of international trade rules and amending Council Regulation (EC) No 3286/94 laying down Community procedures in the field of the common commercial policy in order to ensure the exercise of the Community’s rights under international trade rules, in particular those established under the auspices of the World Trade Organization, OJ EU L 2014 L 189/50.

1.2

Defining the Notion of “Trade Defence Instruments”

5

just mentioned, anti-dumping, anti-subsidy and general safeguard measures are usually attributed a “defensive” character, whereas the TBR and the Enforcement Regulation are considered more “offensive” trade defence instruments. Despite these differences in characterization, all of the above-mentioned legislative instruments share the common objective of granting European companies “protection” in international trade, be it against “unfair” trade practices by companies located in third countries or by the government of the third countries themselves (dumping and subsidies), against excessive competitive pressure due to a sharp rise in imports (safeguard measures) or against market access barriers in third countries which are not in line with the countries’ obligations under international economic law (TBR and Enforcement Regulation).16 Once common, voluntary agreements restricting trade (so-called “grey area measures”) have become impermissible under international law following the entry into force of the WTO Agreement on Safeguards.17,18 Where import restrictions are applied to third countries for non-economic reasons (e.g. the prohibition of imports of endangered species or tropical timber), this is usually not referred to as a trade defence measure. The above-mentioned instruments form part of the EU’s trade policy because they only relate to trade with third countries. Hence, they are a component of the EU’s common commercial policy, and they consequently employ typical trade policy mechanisms such as customs duties (anti-dumping and countervailing duties) and quantitative restrictions (special safeguard measures), or—in isolated instances—a combination of both (e.g. tariff quotas). The terminology of “measures to protect trade” as contained in Article 207 (1) TFEU or “trade defence instruments” does not encompass restrictions to trade within the EU imposed by the Member States. This includes in particular derogations from primary law such as those permitted by Article 36 TFEU or by Article 114 (4) to (10) TFEU or restrictions to the free movement of goods mandated by overriding requirements in the public interest.19 While these are sometimes also referred to as “defensive” or “protective” measures, opposite to trade defence measures, they are motivated by non-economic concerns such as consumer protection or environmental protection. Measures which restrict trade between the Member

While certain trade practices are sometimes considered to constitute “unfair” competition, it would be inaccurate to assume that the EU’s trade defence measures were concerned with the protection of competition itself (but cf. European Commission, Global Europe, p. 2). Competition law concepts such as market structure, market power or the question of collusion are largely irrelevant when deciding upon the imposition of trade defence measures, both from a legal and a political perspective (this does not, of course, preclude the undertakings’ behaviour from being scrutinised under EU competition rules in a separate investigation): trade defence instruments are not concerns with protection competition, but with protecting competitors. 17 Agreement on Safeguards, OJ EC 1994 L 336/184. 18 On this subject matter cf. Vidigal (2019), pp. 187–210. 19 European Court of Justice, judgment of 20 February 1979, case 120/78, ECLI:EU:C:1979:42, Rewe v Bundesmonopolverwaltung für Branntwein, para. 8. 16

6

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The Foundations

States and which are driven by economic concerns are per se prohibited by the fundamental freedoms.20 Likewise, the TFEU provisions on the customs union prohibit the Member States from levying customs duties on goods originating in another Member State or on goods coming from third countries which are in free circulation in Member States (Articles 28 to 32 TFEU).

1.3 1.3.1

Historical Development Defensive Measures to Protect Trade

Already in the late eighteenth century, scholars devoted their attention to the issues of dumping and subsidisation.21 However, States did not include legal provisions on action against dumped or subsidised imports originating in other countries in their legislation until the beginning of the twentieth century.22 Trade defence legislation proliferated across the globe during the second half of the twentieth century. Since the 1970s, a dramatic increase in the worldwide imposition of anti-dumping and countervailing duties has been noted.23 At the international level, provisions regulating the use of anti-dumping and countervailing duties were first agreed upon in the General Agreement on Tariffs and Trade (GATT) of October 30, 1947. As is well-known, as the GATT 1947 never entered into force de jure; it was only applied provisionally on the basis of a protocol. As a central consequence of this deficient state of affairs, the GATT 1947 contracting parties enjoyed far-reaching “grandfathering rights”. Accordingly, they only had to comply with the obligations arising from the GATT 1947 for newly enacted legislation, but did not have to adapt already existing laws to bring them into conformity with the provisions of the GATT 1947. In the area of trade defence instruments, the United States benefitted from this particularly, as they already had anti-dumping as well as anti-subsidy legislation in place at that time. Moreover, the GATT 1947 rules on the use of trade defence instruments were both incomplete and

20 European Court of Justice, judgment of 28 April 1998, case C-120/95, ECLI:EU:C:1998:167, Decker v Caisse de maladie des employés privés, para. 39. 21 Cf. the quote by Alexander Hamilton referred to by Beseler (1980), p. 13. 22 The United States’ legislation against subsidised imports of 1890, the Belgian Countervailing Duty Act of 1892, the introduction of an anti-dumping clause in Canadian tariff law in 1904 and the introduction of anti-dumping legislation by New Zealand in 1905 are among the earliest examples of countries adopting trade defence legislation. 23 Cf. the reports published by the WTO, e.g. World Trade Statistical Review 2019, available at .

1.3

Historical Development

7

vague. In the subsequent rounds of negotiations between the contracting parties, the Anti-Dumping Code of 1967,24 which was revised in 1979,25 was the first plurilateral agreement specifically on trade defence measures, followed by the Anti-Subsidy Code of 1979.26 Owing to the negotiation techniques employed at that time, however, the commitments only applied to those GATT 1947 contracting parties that expressly accepted them (GATT à la carte).27 It was not until the establishment of the WTO in 1994 that both the GATT (as GATT 1994) and the Uruguay Round Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (Anti-Dumping Agreement or ADA),28 the Agreement on Subsidies and Countervailing Measures (ASCM)29 and the Agreement on Safeguard Measures30 became binding on all WTO members as so-called “Multilateral Trade Agreements” (cf. Articles II:2, XIV:1 WTO Agreement). It is these agreements which currently form the international law framework for the design and application of trade defence instruments at the EU level.31 It should further be noted that WTO members may choose to modify their obligations under WTO law relative to some of their respective trading partners: Inter alia, the parties to a free trade agreement may decide to outlaw the application of trade defence measures vis-à-vis the other party in general,32 or make the imposition of trade defence measures subject to further procedural or substantive hurdles. This also applies with regard to the EU, as the bilateral trade agreements concluded by the EU frequently address the subject matter of trade defence instruments and provide for 24 Décision du Conseil, du 27 novembre 1967, portant conclusion d’accords multilatéraux signés à l’issue de la Conférence de négociations commerciales de 1964–1967, OJ EEC 1968 L 305/12. 25 Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994: Marrakesh Agreement Establishing the World Trade Organization, Annex 1A (1868 U.N.T.S. 201). 26 Agreement on Interpretation and Application of Articles VI, XVI and XXIII of the General Agreement on Tariffs and Trade, OJ EC 1980 L 71/72. 27 Cf. also the information available on the WTO website on the subject of the historical development of the WTO, https://www.wto.org/english/tratop_e/dispu_e/disp_settlement_cbt_e/c2s1p1_e. htm. 28 Council Decision of 22 December 1994 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986–1994), Annex 1, Annex 1A, Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, OJ EC 1994 L 336/103. 29 Council Decision of 22 December 1994 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986–1994), Annex 1, Annex 1A, Agreement on Subsidies and Countervailing Measures, OJ EC 1994 L 336/156. 30 Council Decision of 22 December 1994 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986–1994), Annex 1, Annex 1A, Agreement on Safeguards, OJ EC 1994 L 336/184. 31 Cf. below p. 22 et seq. 32 However, this is extremely rare. Instances where the parties have decided to pursue such an approach include e.g. the Trade Agreement between Australia and New Zealand. On this subject cf. Müller-Ibold (2018a), pp. 191–231; Van Vaerenbergh (2018), pp. 217–236.

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The Foundations

additional requirements to be observed when deciding upon their imposition. For example, the chapter on trade remedies in the free trade agreement concluded between the EU and Singapore provides for a transparency and information exchange mechanism, and it further prescribes that the level of anti-dumping or countervailing duties imposed should be less than the margin of dumping or subsidisation if such lesser duty would be adequate to remove the injury to the domestic industry.33 The establishment of the customs union within the framework of the European Economic Community (EEC) entailed the need to harmonize the trade defence instruments applied vis-à-vis third countries as well. To this end, the Council adopted its 1962 work programme for a common commercial policy. The programme mandated the Member States to consult each other before introducing anti-dumping or anti-subsidy duties on the national level.34 At the end of the transitional period as laid out in the EEC Treaty, the trade defence measures were to be applied “in accordance with the principle of uniformity”, as stipulated by Article 113 (1) EEC Treaty. In the context of the customs union, this required a single approach to be adopted by the Community, instead of coordinated action by the Member States.35 Accordingly, in 1965, the Commission submitted a proposal for a regulation on protection against practices of dumping, premiums or subsidies by countries not members of the EEC. As a result of various requests for amendments and the ongoing, parallel negotiations on a GATT Anti-Dumping Code (which were eventually concluded successfully),36 in 1967, the Commission presented a new legislative proposal. The Council approved the proposal; and the EU’s first legislation on action against dumped or subsidized imports entered into force as Regulation (EEC) No. 459/6837 on July 1, 1968—at the same time as the Community’s Common Customs Tariff.38 The Community’s early trade defence arsenal was further supplemented by Regulation (EEC) No. 2041/68, which, in its Article 4, established uniform rules for the imposition of import quotas or the suspension of the freedom to import certain products as immediate measures against a sharp increase in imports into the Community,39 effective from January 1, 1969.

33 Cf. Chapter 3 of the Free Trade Agreement between the European Union and the Republic of Singapore, 14 November 2019, OJ EU 2019 L 294/3. 34 Council Decision on a Programme of Action in Matters of Common Commercial Policy, OJ EC 1962 No. 90/2353, point A) 3) lit. b). 35 Beseler (1980), p. 15. 36 Cf. above p. 6 et seq. 37 Regulation (EEC) No 459/68 of the Council of 5 April 1968 on protection against dumping or the granting of bounties or subsidies by countries which are not members of the European Economic Community, OJ EEC 1968 L 93/1. 38 On the historical developments underlying the introduction of the Common Customs Tariff cf. Beseler (1980), p. 15 et seq. with further references. 39 The full title of which is Regulation (EEC) No. 2041/68 of the Council of 10 December 1968 establishing a common list for the liberalization of imports into the Community concerning third countries, OJ EEC 1968 L 303/1.

1.3

Historical Development

9

These developments were accompanied by the introduction of a supplementary surveillance regime for the control of import quantities by Regulation (EEC) No. 2045/68 laying down a special procedure for imports of certain products from certain third countries.40 Over the following years, Regulation (EEC) No. 459/68 was amended several times41 to strengthen the Commission’s investigative rights,42 to provide for changes necessitated by the accessions of Great Britain, Ireland and Denmark to the Community,43 to clarify certain aspects of the determination of dumping, and, in response to the first ruling of the European Court of Justice (ECJ) in the area of anti-dumping law,44 to provide that the parties to the investigation shall be informed about the essential grounds underlying the imposition of trade defence measures prior to their entry into force.45 In addition, in 1977, the Commission issued a legally binding recommendation for the Member States concerning products covered by the Treaty of Rome establishing the European Coal and Steel Community (ECSC Treaty). The communication required the Member States to consult with the Commission in advance where they intended to apply trade defence measures on ECSC products.46 The Anti-Dumping Code, as amended during the Tokyo Round of the GATT in 1979,47 and the new Subsidies Code48 were fully implemented into EU trade defence law by Regulation (EEC) No. 3017/79.49 In the 1980s, the regulation was replaced

40

Regulation (EEC) No 2045/68 of the Council of 10 December 1968 establishing a special procedure for the importation of certain products originating in certain third countries, OJ EEC 1968 L 303/43. 41 On the reasons underlying these changes cf. Beseler (1980), p. 19 et seq. 42 Regulation (EC) No 2011/73 of the Council of 24 July 1973 amending Regulation (EEC) No 459/68 on protection against dumping or the granting of bounties or subsidies by countries which are not members of the European Economic Community, OJ EC 1973 L 206/3. 43 Council Regulation (EEC) No 1411/77 of 27 June 1977 amending Regulation (EEC) No 459/68 on protection against dumping or the granting of bounties or subsidies by countries which are not members of the European Economic Community, OJ EC 1977 L 160/4. 44 European Court of Justice, judgment of 29 March 1979, joined cases 113/77, 118/77 to 121/77, ECLI:EU:C:1979:91, Toyo Bearing I. 45 Council Regulation (EEC) No 1681/79 of 1 August 1979 amending Regulation (EEC) No 459/68 on protection against dumping or the granting of bounties or subsidies by countries which are not members of the European Economic Community, OJ EC 1979 L 196/1. 46 Commission Recommendation No. 2739/78/ECSC of 15 April 1977 on protection against dumping or the granting of bounties or subsidies by countries which are not members of the European Coal and Steel Community, OJ EC 1977 L 114/6. 47 Agreement on implementation of Article VI of the General Agreement on tariffs and trade, OJ EC 1980 L 71/90. 48 Agreement on interpretation and application of Articles VI, XVI and XXIII of the General Agreement on tariffs and trade, OJ EC 1980 L 71/72. 49 Council Regulation (EEC) No 3017/79 of 20 December 1979 on protection against dumped or subsidized imports from countries not members of the European Economic Community, OJ EC 1979 L 339/1.

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The Foundations

by Regulation (EEC) No. 2176/84,50 which amended the previous regulation. Regulation (EEC) No. 2176/84, in turn, was succeeded in 1988 by Regulation (EEC) No. 2423/88.51 Measures concerning subject matters regulated by the ECSC Treaty were adapted accordingly.52 The conclusion of the Uruguay Round negotiations and the establishment of the WTO as an international organization53 as well as the agreement on the adoption of the ADA54 and the ASCM55 required further revisions to the then Community’s rules on trade defence instruments.56 This involved splitting the rules on antidumping and anti-subsidy measures, formerly contained in one single regulation, into two independent regulations. Henceforth, Regulation (EC) No. 384/96 on protection against dumped imports from countries not members of the European Community57 and Regulation (EC) No. 2026/97 on protection against subsidized imports from countries not members of the European Community58 formed the backbone of the EU’s trade defence regime. The rules governing the imposition of safeguard measures, which became necessary following the conclusion of the WTO Agreement on Safeguards,59 have since been found in Regulation (EC) No. 518/94 on the common rules for imports and repealing Regulation (EEC) No. 288/82, and later in Regulation (EC) No. 3285/94 on the common rules for imports and repealing Regulation (EC) No 518/94. Today, the EU’s common rules for imports are laid out in Regulation (EU) 2015/478.60

50

Council Regulation (EEC) No 2176/84 of 23 July 1984 on protection against dumped or subsidized imports from countries not members of the European Economic Community, OJ EC 1984 L 201/1. 51 Council Regulation (EEC) No 2423/88 of 11 July 1988 on protection against dumped or subsidized imports from countries not members of the European Economic Community, OJ EC 1988 L 209/1. 52 Commission Recommendation No. 77/329/ECSC was replaced by recommendation No. 3018/ 79/ECSC of 21 December 1979, OJ EC 1979 L 339/15, Commission Decision No. 2177/84/ECSC of 27 July 1984, OJ EC 1984 L 201/17, Commission Decision No. 2424/88/ECSC of 29 July 1988, OJ EC 1988 L 209/18 and Commission Decision No. 1889/98/ECSC of 3 September 1998, OJ EC 1988 L 245/3. 53 As the legal successor to the EC, the EU is a de jure member of the WTO, cf. Article XI:1 WTO Agreement. 54 Cf. above fn. 26. 55 Cf. above fn. 28. 56 Cf. on this topic e.g. Vermulst and Waer (1995), pp. 53–76; Vermulst and Waer (1999), pp. 19–44. 57 Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community, OJ EC 1996 No. L 56/1. 58 Council Regulation (EC) No 2026/97 of 6 October 1997 on protection against subsidized imports from countries not members of the European Community, OJ EC 1997 No. L 288/1. 59 Cf. above fn. 30. 60 Regulation (EU) 2015/478 of the European Parliament and of the Council of 11 March 2015 on common rules for imports, OJ EU 2015 L 83/16.

1.3

Historical Development

11

In 2009, Regulation (EC) No. 2026/97 was replaced by Regulation (EC) No. 597/2009 on protection against subsidized imports from countries not members of the European Community.61 In essence, Regulation (EC) No. 597/2009 constituted a consolidated version of Regulation (EC) No. 2026/97 and the multiple amendments made thereto.62 In a similar vein, Regulation (EC) No. 260/2009 on common rules for imports63 consolidated the already existing provisions governing imports into the Community and later the EU.64 The same applied with regard to the consolidated version of the basic anti-dumping regulation as adopted in December 2009.65 In 2015 and 2016, consolidated versions of these regulations were adopted,66 essentially incorporating the changes made by the so-called “Comitology Regulation” (EU) No. 182/2011.67,68 In 2017 and 2018, the first comprehensive reform of the EU’s trade defence regime in more than 20 years took place through Regulation (EU) 2017/232169 and Regulation (EU) 2018/825,70 with the thus updated versions

61

Council Regulation (EC) No. 597/2009 of 11 June 2009 on protection against subsidised imports from countries not members of the European Community, OJ EU 2009 L 188/93. 62 Cf. recital 1 of Council Regulation (EC) No. 597/2009. 63 Council Regulation (EC) No. 260/2009 of 26 February 2009 on the common rules for imports, OJ EU 2009 L 84/1. 64 Cf. recital 1 of Council Regulation (EC) No. 260/2009 of 26 February 2009 on the common rules for imports. 65 Council Regulation (EC) No. 1225/2009 of 30 November 2009 on protection against dumped imports from countries not members of the European Community, OJ EU 2009 L 343/51. 66 Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union, OJ EU 2016 L 176/21, Regulation (EU) 2016/1037 of the European Parliament and of the Council of 8 June 2016 on protection against subsidised imports from countries not members of the European Union, OJ EU 2016 L 176/55 and Regulation (EU) 2015/478 of the European Parliament and of the Council of 11 March 2015 on common rules for imports, OJ EU 2015 L 83/16. 67 Regulation (EU) No. 182/2011 of the European Parliament and of the Council of 16 February 2011 laying down the rules and general principles concerning mechanisms for control by Member States of the Commission’s exercise of implementing powers, OJ EU 2011 L 55/13. Regulation (EU) No. 37/2014, OJ EU 2014 L 18/1 and Regulation (EU) No. 38/2014, OJ EU 2014 L 18/52 (Omnibus I and II) integrate the amendments made by the Comitology Regulation in the secondary legislation governing the use of trade defence instruments. 68 In detail on the changes to the EU’s trade defence instruments following the introduction of the Comitology Regulation cf. Dordi and Forganni (2013), pp. 359–389. 69 Regulation (EU) 2017/2321 of the European Parliament and of the Council of 12 December 2017 amending Regulation (EU) 2016/1036 on protection against dumped imports from countries not members of the European Union and Regulation (EU) 2016/1037 on protection against subsidised imports from countries not members of the European Union, OJ EU 2017 L 338/1. 70 Regulation (EU) 2018/825 of the European Parliament and of the Council of 30 May 2018 amending Regulation (EU) 2016/1036 on protection against dumped imports from countries not members of the European Union and Regulation (EU) 2016/1037 on protection against subsidised imports from countries not members of the European Union, OJ EU 2018 L 143/1. In detail on the amendments introduced by Regulation (EU) 2018/825 cf. below p. 24 et seq.

12

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The Foundations

of the basic anti-dumping and the anti-subsidy regulation forming the current legal framework for the vast majority of trade defence measures imposed by the EU.71

1.3.2

Offensive Measures to Protect Trade

The “offensive” part of the EU’s trade contingency measures looks back on a considerably briefer history: it was only introduced in 1984 by means of the so-called “New Trade Policy Instrument” (or “NTPI”),72 which was replaced by the so-called “Trade Barriers Regulation” in 1994.73 The current consolidated version of the Trade Barriers Regulation (TBR) can be found in Regulation (EU) 2015/1843.74 Section 301 of the U.S. Trade and Tariff Act of 1974 served as a model for the EU legislation.75 Accordingly, the Regulation is based on the rationale that a trade defence arsenal containing rules on anti-dumping and countervailing measures as well as safeguard measures is incomplete as these measures do not always provide for an appropriate response to all forms of traderestrictive practices operated by third States:76 Where a third country applies a trade practice which violates its bilateral or multilateral obligations towards the EU under international economic law, this can usually be answered with retaliatory measures or reprisals as permitted under public international law. However, these options do not align with the system of “defensive” measures to protect trade such as antidumping or countervailing duties. Insofar as specific dispute settlement procedures are provided for in international treaties, it is upon the EU or its Member States to grant the European companies involved diplomatic protection, as they usually do not have access to dispute settlement mechanisms in international law. Only in the area of international investment law, natural and legal persons may initiate legal proceedings against measures taken by a State through the mechanism of investor-State

71

Cf. in detail on the BADR and the BASR below p. 26 et seq. and p. 60 et seq., respectively. Council Regulation (EEC) No 2641/84 of 17 September 1984 on the strengthening of the common commercial policy with regard in particular to protection against illicit commercial practices, OJ EEC 1984 L 252/1. 73 Council Regulation (EC) No 3286/94 of 22 December 1994 laying down Community procedures in the field of the common commercial policy in order to ensure the exercise of the Community’s rights under international trade rules, in particular those established under the auspices of the World Trade Organization, OJ EC 1994 L 349/71. 74 Regulation (EU) 2015/1843 of the European Parliament and of the Council of 6 October 2015 laying down Union procedures in the field of the common commercial policy in order to ensure the exercise of the Union’s rights under international trade rules, in particular those established under the auspices of the World Trade Organization, OJ EU 2015 L 272/1. 75 On section 301 of the U.S. Trade and Tariff Act and its predecessors cf. Bhala and Kennedy (1998), p. 1009 et seq.; Kearns and Ohlhoff (2003), p. 786 et seq. 76 Cf. also MacLean (2006), p. 1 et seq., para. 1-001. 72

1.3

Historical Development

13

dispute settlement (ISDS).77 The Trade Barriers Regulation seeks to remedy this situation. It effectively lays down a formal investigation and decision-making procedure in which the EU may decide on whether to initiate dispute settlement proceedings under international trade agreements and on whether to impose retaliatory trade policy measures.78 As mentioned in the previous paragraph, it was in 1984 that the Union first adopted legislation to strengthen its commercial policy and, in particular, the protection of the EU industry against unlawful trade practices by means of the New Trade Policy Instrument.79 At the core of the Regulation lay provisions subjecting the decision to initiate dispute settlement proceedings, and, where necessary, further trade policy measures, to a formal procedure. The possible trade policy measures included the suspension of treaty-based trade concessions or raising tariff rates. However, even before the entry into force of the New Trade Policy Instrument, the Union had been capable of introducing such measures on the basis of the primary law provision of Article 113 (3) EEC Treaty (later to be re-numbered to Article 133 (3), first sentence EEC Treaty).80 Instead, the relevance of the newly adopted New Trade Policy Instrument lay in the introduction of a right for companies affected by unlawful trade practices to submit a complaint to the Commission, as well as the formalisation of the proceedings, which required the EU institutions to state reasons for their decisions. Moreover, the rules on decision making,81 which significantly shifted the balance of power between the Council and the Commission in favour of the latter, were of considerable importance. Yet, the NTPI initially did not prove to be very successful. This was attributed in particular to the lack of an effective dispute settlement mechanism under the GATT. Parallel to the 1994 Dispute Settlement Understanding of the WTO (DSU), which fundamentally improved the dispute settlement mechanisms in WTO law, the New Trade Policy Instrument was replaced by the Trade Barriers Regulation.82 The Regulation was intended to safeguard the Community’s rights under international trade rules, in particular those established under the auspices of the WTO. Since its entry into force, the Regulation has been amended on three occasions.83 Regulation (EU) No 654/2014,84 the so-called “Enforcement Regulation” pursues objectives similar to those pursued by the Trade Barriers Regulation, namely to 77

On this subject cf. Dolzer and Schreuer (2012), p. 214 et seq. (222 et seq.); Griebel (2008), pp. 11 et seq., 114 et seq. 78 On the Trade Barriers Regulation cf. below p. 69 et seq. 79 Cf. above fn. 72. 80 Whether this is also possible under Article 207 (2) TFEU is doubtful, cf. below p. 21 et seq. 81 Cf. below p. 59 et seq. 82 Cf above fn. 73. 83 Council Regulation (EC) No. 356/95 of 20 February 1995 amending Regulation (EC) No. 3286/ 94 laying down Community procedures in the field of the common commercial policy, OJ EC 1995 L 41/3; Council Regulation (EC) No. 125/2008 of 12 February 2008, OJ EU 2008 L 40/1 and Regulation (EU) 2015/1843 of 6 October 2015, OJ EU 2015 L 272/1. 84 Cf. above fn. 15.

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The Foundations

ensure that the EU’s trading partners fulfil their commitments assumed vis-à-vis the EU under international trade rules. To this aim, the Enforcement Regulation permits the EU to suspend or withdraw its own commitments where the other State either is found to be in violation of its commitments by a dispute settlement body or where it blocks the resolution of a conflict regarding the scope of its obligations under international trade rules by means of a dispute settlement procedure.85 Following the 2021 reform to the Enforcement Regulation, the same now also applies where adjudication is not possible because the third country is not taking the necessary steps for a dispute settlement procedure to function.

1.4

The Economic and Legal Rationale Underlying the Imposition of Trade Defence Measures

Whether the imposition of trade defence measures can be justified from an economist’s point of view is frequently called into question86—and rightly so. The imposition of additional tariffs on imports inevitably leads to an increase in the prices at which they are sold on the internal market. This in turn results in higher costs for the buyers of the goods, be they industrial users of the product concerned or private consumers. In economic terms, this constitutes welfare losses. These losses will usually not be outweighed by the welfare gains of domestic industries benefitting from the imposition of trade defence measures and the consequent reduction in competitive pressure they face.87 However, even where the domestic industry’s welfare gains offset the welfare losses incurred by other economic operators or where the welfare gains outweigh the welfare losses, the question arises as to how the ensuing welfare transfer from domestic buyers of the product concerned to domestic producers can be justified. In any event, the argument of exporting producers practicing “price discrimination” between their domestic markets and their export markets, which is usually at the centre of the discussion surrounding the imposition of anti-dumping measures, does not provide sufficient justification.88 It must further be called into question whether anti-dumping duties are an adequate response to this issue at all, as they do not address the circumstances enabling an exporting producer to practice price discrimination, but instead remain focussed on the pricing practice itself. For this reason, anti-dumping duties are often described as only being a “second best” solution.89 Another rationale provided for the imposition

85

Cf. on the Enforcement Regulation below p. 72 et seq. Cf. e.g. the analysis provided by Bhaur (2008), pp. 253–260. 87 Beseler (1980), p. 44 (on short-term dumping); Weiß et al. (2022), p. 251 et seq.; Viner (1996), p. 138. 88 Already calling the usefulness of the imposition of anti-dumping duties into doubt in 1923: Viner (1996), p. 159 et seq. 89 Müller-Ibold (2018b), pp. 541–576 (548). 86

1.4

The Economic and Legal Rationale Underlying the Imposition of. . .

15

of anti-dumping measures is that selling goods at dumped prices enables the foreign exporting producers to outcompete their EU counterparts, resulting in the latter’s exit from the market (so-called “predatory pricing”).90 Yet, economic theory does not support this hypothesis: studies have shown that only in very few cases dumping actually reflects a genuine predatory pricing strategy. Similarly, economic evidence proving that dumping indeed leads to undesirable welfare effects is scarce.91 Analogous arguments can be employed to call the legal and economic rationale underlying the imposition of countervailing duties into doubt. Notwithstanding, if one also takes the political economy underlying the use of trade defence instruments into account, it becomes apparent that the imposition of trade defence measures has proven a necessary side effect of the liberalization of international trade. Acting as a “safety valve”, they serve to reduce the pressure domestic protectionist forces exert on politicians, which could potentially endanger the success of the liberalization of international trade as a whole. Moreover, people will usually value the preservation of their jobs, which are threatened by import competition, considerably more highly than the abstract welfare gains to society as a whole as described above that would accrue from lower prices and a greater bandwidth of products to choose from. It therefore is significantly easier for opponents of free trade to mobilize support for their positions by drawing on domestic workers’ fear of losing their jobs than it is for the proponents of trade liberalization to make themselves heard. Consequently, trade defence instruments are vulnerable to be abused for protectionist purposes.92 As can be inferred from the above, the imposition of trade defence measures always interferes with the free play of competition. It further disrupts the existing situation in the market with regard to competition between EU producers and the exporting producers of goods, between EU producers and buyers, and possibly even between different firms producing the product concerned where parts of the EU producers have production facilities in third countries and are consequently excluded from the notion of the “Union industry” under the basic anti-dumping and antisubsidy regulation.93

90

Mueller et al. (2009), paras. I.09–I.16; Viner (1996), p. 120 et seq. Cf. e.g. Sandkamp (2018); Prawitz and Kasteng (2013), p. 12 et seq.; Bienen et al. (2013); Bourgeois and Messerlin (1998), p. 127 et seq.; Willig (1998), p. 57 et seq. Defending the necessity of anti-dumping measures also outside the scope of predatory dumping: Holmes and Kempton (1997). 92 Cf. the analysis of the EU’s practice concerning the imposition of anti-dumping and anti-subsidy measures against products originating in China provided by MacLean (2012), p. 189 et seq. and Müller (2016), p. 1 et seq. (11 et seq.). 93 On this cf. below p. 36. 91

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The Foundations

References Academic Literature Alter, Steinberg (2007) The theory and reality of the European Coal and Steel Community. In: Meunier, McNamara (eds) Making history: European integration and institutional change at fifty Beseler (1980) Die Abwehr von Dumping und Subventionen durch die Europäischen Gemeinschaften Bhala, Kennedy (1998) World Trade Law Bhaur (2008) Use of antidumping and its economic impact. Glob Trade Cust J 3(7/8) Bienen et al (2013) Trade and development discussion paper: does antidumping address “unfair” trade? – The European Union’s experience Boscheck (2001) The governance of global market relations: the case of substituting antitrust for antidumping. World Compet 24(1) Bourgeois, Messerlin (1998) The European Community’s experience. In: Lawrence (ed) Brookings Trade Forum Bungenberg (2010) Going global? The EU common commercial policy after Lisbon. In: Herrmann, Terhechte (eds) European Yearbook of International Economic Law 2010 Dederer (2013) The common commercial policy under the influence of commission, council, high representative and European external action service. In: Bungenberg, Herrmann (eds) Common commercial policy after Lisbon Dolzer, Schreuer (2012) Principles of international investment law Dordi, Forganni (2013) The comitology reform in the EU: potential effects on trade defence instruments. J World Trade 47(2) García, Khorana (2018) Handbook on the EU and international trade Griebel (2008) Internationales Investitionsrecht Holmes, Kempton (1997) Study on the economic and industrial aspects of anti-dumping policy Kearns, Ohlhoff (2003) C.II.2, Durchsetzung der WTO-Abkommen in den Vereinigten Staaten von Amerika. In: Prieß, Berrisch (eds) WTO-Handbuch MacLean (2006) EU trade barriers regulation: tackling unfair foreign trade practices MacLean (2012) Adored and despised in equal measure: an assessment of the EU’s principle of market economy treatment in anti-dumping investigations against China. In: Herrmann, Terhechte (eds) European Yearbook of International Economic Law 2012 Mueller, Khan, Scharf (2009) EC and WTO anti-dumping law: a handbook Müller (2016) “One country, two systems”? The prospects of EU trade defence against Chinese imports after 2016 Müller-Ibold (2018a) EU trade defence instruments and free trade agreements. In: Bungenberg, Herrmann, Hahn, Müller-Ibold (eds) The future of trade defence instruments Müller-Ibold (2018b) Antidumping and competition law – common origin, a life of their own and peaceful coexistence? In: Kokott, Pohlmann, Polley (eds) Europäisches, Deutsches und Internationales Kartellrecht Nastoll (2013) EU anti-dumping law, imports from China and treatment of non-market economy countries: Brosmann, Grünwald and Zhejiang Xinan. Common Mark Law Rev 50(1) Prawitz, Kasteng (2013) Effects on trade and competition of abolishing anti-dumping measures: the European Union experience Sandkamp (2018) The trade effects of antidumping duties: evidence from the 2004 EU enlargement Van Vaerenbergh (2018) The role of trade defence instruments in EU trade agreements: theory versus practice. Zeitschrift für Europarechtliche Studien (ZEuS) 21(2) Vermulst, Gatta (2012) Concurrent trade defense investigations in the EU, the EU’s new antisubsidy practice against China, and the future of both. World Trade Rev 11(3) Vermulst, Waer (1995) The post-Uruguay Round EC anti-dumping regulation. J World Trade 29(2)

References

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Vermulst, Waer (1999) EC anti-subsidy law and practice after the Uruguay Round. J World Trade 33(3) Vidigal (2019) The return of voluntary export restraints? How WTO law regulates (and doesn’t regulate) bilateral trade-restrictive agreements. J World Trade 53(2) Viner (1996) Dumping. A problem in international trade Weiß, Ohler, Bungenberg (2022) Welthandelsrecht Willig (1998) Economic effects of antidumping policy. In: Lawrence (ed) Brookings Trade Forum

Chapter 2

The Current Legal Framework Governing the EU’s Trade Defence Instruments

2.1

Primary Law

According to Article 3 (3) TEU, the objectives the European Union seeks to attain also include the establishment of a “highly competitive social market economy”. Pursuant to the first sentence of Article 3 (5) TEU, in its relations with the wider world, the EU is to “protect and promote its values and interests” and to “contribute to the protection of its citizens”. Furthermore, the second sentence of Article 3 (5) TEU requires the EU to contribute to “free and fair” trade. This is further specified in Article 21 (2) TEU on the principles and objectives guiding the EU’s external action, including its common commercial policy. Article 21 (2) (e) TEU prescribes that the EU’s external action shall attain a high degree of cooperation in international relations in order to encourage the integration of all countries into the world economy, including through the progressive abolition of restrictions on international trade. In doing so, the EU is to ensure coherence between its different policies, Article 21 (3) subpara. 2 TEU and Article 7 TFEU. Finally, pursuant to Articles 11 to 13 TFEU, the EU must have regard to the requirements of environmental protection, consumer protection and animal welfare in its external relations.1 As can be inferred from Article 3 (1) (a) and (e) TFEU, the EU is exclusively competent with regard to the establishment of the customs union and the common commercial policy. Accordingly, it falls upon the EU to formulate the trading bloc’s policies, to adopt legislation and to conclude international agreements in these policy

1 This was explicitly confirmed with regard to Articles 9 and 11 in the European Court of Justice’s Opinion 2/15 of 16 May 2017, ECLI:EU:C:2017:376, EU-Singapore FTA, para. 146. While Article 13 TFEU does not extend to the EU’s common commercial sense, no argument can be made for limiting the EU’s obligation to observe and promote animal welfare in its external relations, which are frequently described as constituting the “external face of the internal market”.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 C. Herrmann, P. Trapp, EU Trade Defence Law and Practice, SpringerBriefs in Law, https://doi.org/10.1007/978-3-031-25330-0_2

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The Current Legal Framework Governing the EU’s Trade Defence Instruments

areas.2 The only exception are instances where the Union empowers the Member States to adopt legislation or to negotiate and conclude trade agreements themselves.3 It should further be noted that while it is for the EU institutions to define the Union’s policies in the areas in which it has exclusive competence, as a rule, it is the Member States who adopt all measures of national law necessary to implement legally binding Union acts.4 According to Article 28 (1) TFEU, the customs union also encompasses the introduction of a Common Customs Tariff (CCT) vis-à-vis third States. The rates of said customs tariff shall be fixed by the Council, acting on a proposal from the Commission, Article 31 TFEU. Article 206 TFEU provides clarification regarding the objectives underlying the creation of the customs union: in establishing a customs union, the Union shall contribute, in the common interest, to the harmonious development of world trade, the progressive abolition of restrictions on international trade and on foreign direct investment, and the lowering of customs and other barriers.

As already mentioned above, Article 207 TFEU mandates the EU’s common commercial policy measures to be based on uniform principles. This requirement must also be observed with regard to the EU’s trade defence instruments. To achieve the desired uniformity, according to Article 207 (2) TFEU, the European Parliament and the Council, acting by means of regulations in accordance with the ordinary legislative procedure, shall adopt the measures defining the framework for implementing the common commercial policy.

These encompasse the Union’s general rules on import and export, and they further cover the basic regulations governing the use of trade defence instruments. Conversely, the provision does not extend to decisions on individual measures (that is, implementing measures) in the field of trade defence. In this respect, the implementation of legally binding acts may be delegated to the Commission or the Council in accordance with the requirements of Article 291 (2) TFEU. Accordingly, in the area of trade defence measures, the Commission is tasked with imposing trade defence measures by means of implementing regulations, carrying out investigations, and for the initiation and termination of proceedings. The so-called “Comitology Regulation” (EU) 182/20115 defines the Council’s (limited) scope of involvement—and through it the Member States’ involvement—in the imposition of trade defence measures. Overall, however, the Commission plays the central role in enforcing

2

Articles 2 (1), 3 (2) TFEU, cf. e.g. Regulation (EU) No 1219/2012 of the European Parliament and of the Council of 12 December 2012 establishing transitional arrangements for bilateral investment agreements between Member States and third countries, OJ EU 2012 L 351/40. 3 Article 2 (1) TFEU. 4 Article 291 (1) TFEU, but cf. the exception hereto laid out in Article 291 (2) TFEU. 5 Regulation (EU) No 182/2011 of the European Parliament and of the Council of 16 February 2011 laying down the rules and general principles concerning mechanisms for control by Member States of the Commission’s exercise of implementing powers, OJ EU 2011 L 55/13.

2.1

Primary Law

21

EU trade defence law.6 Conversely, Article 291 (2) TFEU does not provide for a transfer of implementing powers to the European Parliament. Indeed, such a provision would hardly be compatible with the executive nature of implementing legislation.7 The phrasing of Article 133 (2) EC Treaty, the predecessor of Article 207 (2) TFEU, was significantly broader and vaguer. According to Article 133 (2) EC Treaty, the Commission was to “submit proposals to the Council for implementing the common commercial policy”. Based on this provision, the EU’s common commercial policy was implemented almost exclusively by means of regulations. This also applied to the EU’s trade defence instruments, which were adopted under the legal framework provided by the EC Treaty. As the Treaty of Lisbon only amended the provisions of the EC Treaty, the regulations adopted in the area of trade defence remained unaffected by the entry into force of the Treaty of Lisbon. However, the Treaty of Lisbon changed the phrasing of Article 207 (2) TFEU. Under its present wording, the European Parliament and the Council shall adopt the “measures defining the framework for implementing the common commercial policy.” This raised the issue whether the adoption of trade policy measures which do define the framework but are regulating a specific situation in a detailed manner would still be permissible in light of Article 207 (2) TFEU. This concerned in particular the initiation of dispute settlement proceedings and the adoption of sanctions under WTO law: under the EC Treaty, such measures could be based on Article 133 (2) TFEU directly, due to the broad phrasing of the provision. However, under the new phrasing, this seems no longer possible. The EU legislator ultimately responded to the CCP’s dependence on secondary legislation brought about by the amendments introduced by the Treaty of Lisbon8 by adopting the Enforcement Regulation.9 As already mentioned above, the Regulation governs the exercise of the Union’s rights regarding the suspension or withdrawal of trade concessions or other obligations stemming from international trade agreements in accordance with international (trade) law.10 Similarly, the adoption of measures

Van Bael and Bellis (2019), § 1.04 [A]. Tietje (2009); Krajewski (2006), pp. 63, 69 et seq. Cf. also below p. 70 et seq. on the division of institutional competences in the imposition of anti-dumping measures. 8 Cottier and Trinberg (2015), Art. 207 AEUV, para. 104; extensively on this subject matter MüllerIbold (2013), p. 145 et seq. 9 Regulation (EU) No. 654/2014 of the European Parliament and of the Council of 15 May 2014 concerning the exercise of the Union’s rights for the application and enforcement of international trade rules and amending Council Regulation (EC) No. 3286/94 laying down Community procedures in the field of the common commercial policy in order to ensure the exercise of the Community’s rights under international trade rules, in particular those established under the auspices of the World Trade Organization, OJ EU 2014 L 189/50. The regulation was last amended by Regulation (EU) 2021/167 of the European Parliament and of the Council of 10 February 2021, OJ EU 2021 L 49/1. 10 On the scope of application cf. Article 3 of Regulation (EU) No. 654/2014. 6 7

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The Current Legal Framework Governing the EU’s Trade Defence Instruments

under the Trade Barriers Regulation following the amendments to its Article 13 (2) (now Article 14 (2) TBR) is in accordance with the secondary law framework within which the EU’s CCP operates. Yet, scholars agree that recourse may still be had to Article 207 (2) TFEU or to the Trade Policy Committee of the Council in order to resolve controversies surrounding the exercise of the Union’s rights in the area of trade policy, despite the adoption of the Trade Enforcement Regulation and the Trade Barriers Regulation: The recitals11 as well as Article 14 (2) of the Trade Barriers Regulation explicitly state that the adoption of trade policy measures both within and outside the scope of application of the Trade Barriers Regulation shall be effected in accordance with Article 207 TFEU. Thus, the EU legislator appears to regard Article 207 (2) TFEU as a suitable legal basis for the direct adoption of trade policy measures.

2.2

International Economic Law

In addition to the provisions of EU primary law, the EU has to observe its obligations stemming from international treaties in formulating and implementing its common commercial policy,12 in particular with regard to its trade defence instruments. These include, first and foremost, the agreements concluded within the framework of the WTO. In addition, the EU is party to numerous bi- and multilateral trade agreements, the provisions of which likewise have to be observed,13 as these treaties form an “integral part”14 of EU law. It should however be noted that, according to the settled jurisprudence of the ECJ, the agreements concluded under the auspices of the WTO lack direct effect in the EU legal order, as do most bilateral free trade agreements.15 Accordingly, the WTO Agreements do not generate individual rights which could be invoked in proceedings before the EU Courts. Only where the EU acted with the express objective of implementing obligations assumed under the WTO agreements, or where secondary law explicitly refers to such agreements, can the WTO rules be utilized as a yardstick in assessing the legality of EU legislative acts or serve as a relevant source in interpreting EU legislation.16

11

Recitals 7, 8 and 10 of Regulation (EU) 2015/1843. Cf. Article 216 (2) TFEU. 13 Cf. Article 1 (3), third sentence TEU and Article 216 (2) TFEU. 14 European Court of Justice, judgment of 30 April 1974, case 181/73, ECLI:EU:C:1974:41, Haegeman v Belgium, para. 5; European Court of Justice, judgment of 26 October 1982, case C-104/81, ECLI:EU:C:1982:362, Kupferberg v Hauptzollamt Mainz, para. 13. 15 European Court of Justice, judgment of 12 December 1972, joined cases 21-24/72, ECLI:EU: C:1972:115, International Fruit Company, para. 27; confirmed with regard to WTO agreements in European Court of Justice, judgment of 23 November 1999, case C-149/96, ECLI:EU:C:1999:574, Portugal v Council, para. 36. 16 European Court of Justice, judgment of 22 June 1989, case 70/87, ECLI:EU:C:1989:254, Fediol/ III, paras. 19 et seq.; European Court of Justice, judgment of 7 May 1991, case C-69/89, ECLI:EU: 12

2.2

International Economic Law

23

Given the similarities between EU law and WTO law particularly in the area of trade defence, where some of the EU’s provisions are verbatim replica of the corresponding provisions in WTO law, the exceptions to the general rule of WTO law not enjoying direct effect within the EU legal order as detailed above could prima facie be assumed to be of considerable relevance in EU trade defence law.17 However, in IKEA Wholesale Ltd., the European Court of Justice significantly limited the scope of application of the above-mentioned exceptions, holding that the EU legislator did not intend to be bound by the DSB’s interpretations of the AntiDumping Agreement when assessing the legality of EU anti-dumping measures.18 This restrictive stance was confirmed and, accordingly, the scope of application of the Nakajima/Fediol-exceptions narrowed even further in the ECJ’s Rusal Armenal decision of 2016.19 Herein, the Court held that despite recital 5 of the EU basic antidumping regulation stating explicitly that the language of the Anti-Dumping Agreement should be brought into EU legislation “as far as possible”, the EU legislator did not intend to transpose all those rules into the basic anti-dumping regulation. Accordingly, the EU’s rules on calculating the dumping margin could not be measured against the corresponding provisions of the Anti-Dumping Agreement.20 WTO law does not require the WTO members to actually apply trade defence instruments. However, where a WTO member decides to do so, it has to comply with the obligations set out in WTO law, in particular Articles II:2 (b), VI, XVI and XIX GATT 1994 as well as the ADA, ASCM and the Safeguards Agreement. This also applies with regard to the EU. At this point, it should be noted that the provisions contained in bilateral free trade agreements concluded by the EU which govern the application of trade defence instruments between the parties to the agreement regularly refer to the corresponding requirements of WTO law. Occasionally, the trade agreements provide for a modification or supplementation of the WTO rules.21

C:1991:186, Nakajima, paras. 27 et seq.; European Court of Justice, judgment of 23 November 1999, case C-149/96, ECLI:EU:C:1999:574, Portugal v Council, para. 36, para. 49; European Court of Justice, judgment of 30 September 2003, case C-93/02 P, ECLI:EU:C:2003:517, Biret, para. 53; European Court of Justice, judgment of 1 March 2005, case C-377/02, ECLI:EU:C:2005: 121, Van Parys, para. 40; European Court of Justice, judgment of 27 September 2007, case C-351/ 04, ECLI:EU:C:2006:236, IKEA Wholesale Ltd., para. 30. 17 Cf. the jurisprudence of the European Court of Justice in judgment of 22 June 1989, case 70/87, ECLI:EU:C:1989:254, Fediol/III, paras. 19 et seq. and European Court of Justice, judgment of 7 May 1991, case C-69/89, ECLI:EU:C:1991:186, Nakajima, paras. 27 et seq.; General Court, judgment of 4 March 2010, case T-409/06, ECLI:EU:T:2010:69, Sun Sang Kong Yuen Shoes Factory v Council. 18 European Court of Justice, judgment of 27 September 2007, case C-351/04, ECLI:EU:C:2006: 236, IKEA Wholesale Ltd. Cf. also the case note by Herrmann (2008), pp. 1507–1518. 19 European Court of Justice, judgment of 16 July 2015, C-21/14 P, ECLI:EU:C:2015:494, Rusal Armenal. 20 European Court of Justice, judgment of 16 July 2015, C-21/14 P, ECLI:EU:C:2015:494, Rusal Armenal, paras. 50–53. 21 Cf. above p. 7 et seq.

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The relevance of rulings by the WTO Dispute Settlement Body within the EU legal system in the areas of anti-dumping and anti-subsidy law is governed by Regulation (EU) 2015/476.22 As the general rejection of the direct effect of WTO law within the Union legal order also extends to decisions by the WTO Dispute Settlement Body (DSB),23 the Regulation provides for such decisions to be taken into account by the Commission to ensure the WTO law conformity of EU legislation. To this end, existing EU trade defence measures may be repealed or amended in accordance with a WTO ruling, as prescribed by Article 1 of Regulation (EU) 2015/ 476. Pursuant to Article 2 of Regulation (EU) 2015/476, the Commission may also adopt additional measures in order to ensure the continued compliance of the EU’s actions with WTO law and the recommendations contained in the reports made by the DSB with regard to a non-disputed measure, if it considers this appropriate.

2.3 2.3.1

Secondary Law Overview

In essence, the EU secondary law framework for the imposition of trade defence measures consists of five regulations: 1. Regulation (EU) 2016/1036 on protection against dumped imports from countries not members of the European Union24 (basic anti-dumping regulation or BADR); 2. Regulation (EU) 2016/1037 on protection against subsidized imports from countries not members of the European Union25 (basic anti-subsidy regulation or BASR); 3. Regulation (EU) 2015/478 on common rules for imports,26 containing the basic rules on safeguards,

22

Regulation (EU) 2015/476 of the European Parliament and of the Council of 11 March 2015 on the measures that the Union may take following a report adopted by the WTO Dispute Settlement Body concerning anti-dumping and anti-subsidy matters, OJ EU 2015 L 83/6. 23 European Court of Justice, judgment of 30 September 2003, case C-93/02 P, ECLI:EU:C:2003: 517, Biret, paras. 51–53, 57. 24 Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union, OJ EU 2016 L 176/21. 25 Regulation (EU) 2016/1037 of the European Parliament and of the Council of 8 June 2016 on protection against subsidised imports from countries not members of the European Union, OJ EU 2016 L 176/55. 26 Regulation (EU) 2015/478 of the European Parliament and of the Council of 11 March 2015 on common rules for imports, OJ EU 2015 L 83/16. Regulation (EU) 2015/755 of the European Parliament and of the Council of 29 April 2015 on common rules for imports from certain third countries, OJ 2015 L 123/33 is applicable to imports originating in Azerbaijan, Belarus, North Korea, Turkmenistan and Uzbekistan.

2.3

Secondary Law

25

4. Regulation (EU) 2015/1843 laying down Union procedures in the field of the common commercial policy in order to ensure the exercise of the Union’s rights under international trade rules, in particular those established under the auspices of the World Trade Organization27 (Trade Barriers Regulation), and 5. Regulation (EU) No 654/2014, as last amended by Regulation (EU) 2021/167, concerning the exercise of the Union’s rights for the application and enforcement of international trade rules (Enforcement Regulation).28 Very soon, the foreign subsidies regulation will add a major sixth instrument to this toolbox (see below). In 2017 and 2018, the EU’s basic anti-dumping regulation and its basic antisubsidy regulation underwent reform by means of two regulations, Regulation (EU) 2017/232129 and Regulation (EU) 2018/825.30 The reform constituted the first major modernization of the EU’s trade defence instruments in over 20 years. Attempts by the Commission to amend the basic regulations had failed in 2006.31 The Commission then put forward a new proposal for comprehensive reform of the EU’s trade defence instruments in 2013. The debate gained momentum as the “new methodology” of Article 2 (6a) BADR for calculating normal value was introduced in December 2017. Intense inter-institutional negotiations between the European Parliament, Council and Commission finally led to the adoption of Regulation (EU) 2018/825 in May 2018. The reform was intended to improve transparency and predictability, to provide for effective measures to fight against retaliation by third countries, to improve effectiveness and enforcement, and to optimise review practice.32 Moreover, the recitals of the Regulation emphasized the desire to adapt the basic regulations to better resonate with the needs of business at the beginning of

27

Regulation (EU) 2015/1843 of the European Parliament and of the Council of 6 October 2015 laying down Union procedures in the field of the common commercial policy in order to ensure the exercise of the Union’s rights under international trade rules, in particular those established under the auspices of the World Trade Organization, OJ EU 2015 L 272/1. 28 Regulation (EU) No. 654/2014 of the European Parliament and of the Council of 15 May 2014 concerning the exercise of the Union’s rights for the application and enforcement of international trade rules and amending Council Regulation (EC) No 3286/94 laying down Community procedures in the field of the common commercial policy in order to ensure the exercise of the Community’s rights under international trade rules, in particular those established under the auspices of the World Trade Organization, OJ EU 2014 L 189/50. 29 Regulation (EU) 2017/2321 of the European Parliament and of the Council of 12 December 2017 amending Regulation (EU) 2016/1036 on protection against dumped imports from countries not members of the European Union and Regulation (EU) 2016/1037 on protection against subsidised imports from countries not members of the European Union, OJ EU 2017 L 338/1. 30 Regulation (EU) 2018/825 of the European Parliament and of the Council of 30 May 2018 amending Regulation (EU) 2016/1036 on protection against dumped imports from countries not members of the European Union and Regulation (EU) 2016/1037 on protection against subsidised imports from countries not members of the European Union, OJ EU L 2018 143/1. 31 On the 2006 reform attempts cf. Hoffmeister (2015), p. 366 et seq. 32 Recital 3 of Regulation (EU) 2018/825.

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the twenty-first century.33 Lastly, the amendments were to reflect the jurisprudence of the DSB. The most notable changes to the substantive law of the basic regulations include the limitations to the scope of application of the lesser duty rule and the related introduction of the concept of “raw material distortions”34 as well as provisions intended to facilitate access to trade defence instruments for small and medium-sized enterprises (SMEs).35 These modifications will be presented in more detail below.

2.3.2

Anti-dumping Law

2.3.2.1

Substantive Preconditions for the Imposition of Anti-dumping Measures

Measures taken under the basic anti-dumping regulation account for the majority of trade defence measures taken by the EU.36 The purpose of the BADR is to protect EU producers of products like to imported goods from predatory competition by those exporting producers which resort to the unfair trading practice of dumping. For that purpose, the regulation permits the imposition of anti-dumping duties in addition to the regular customs duties that have to be paid upon importation into the EU on imports from certain firms or from certain countries. These additional antidumping duties may only be levied where the EU institutions have found the exporting producers to resort to dumping, and the EU industry to sustain injury as a consequence thereof.37 Moreover, the imposition of anti-dumping duties has to be in the Union interest.38

2.3.2.1.1

Dumping

As a rule, a product is considered as being dumped if its export price to the Union is less than a comparable price for a like product, in the ordinary course of trade, as established for the exporting country (so-called “normal value”).39 Thus, the basic 33

Recital 2 of Regulation (EU) 2018/825. Article 7 (2b) BADR. 35 Article 5 (1a) BADR and Article 10 (1a) BASR. 36 Cf. European Commission, Statistics on Anti-dumping, Anti-subsidy and Safeguard Measures Covering 2021 (2021): on 31 December 2021, the EU had 111 anti-dumping measures in force, but only 19 countervailing and one safeguard measure, available at https://trade.ec.europa.eu/doclib/ docs/2022/february/tradoc_160048.pdf. 37 Article 1 (1) BADR. 38 Article 21 BADR. 39 Article 1 (2) BADR. Extensively on the determination of dumping van Bael and Bellis (2019), § 3. Pursuant to Article 1 (3) BADR, the exporting country shall normally be the country of origin. 34

2.3

Secondary Law

27

anti-dumping regulation tackles a form of international price discrimination.40 The details concerning the determination of the export price and the normal value as well as the comparison between the two are set out in Article 2 BADR. Accordingly, the determination of the existence of dumping is a three-step analysis involving the determination of normal value, export price and a fair comparison being made between these two prices. The difference between the export price and the normal value is referred to as the “dumping margin”.41 It should be noted that, as a prerequisite, the products falling within the scope of the anti-dumping investigation (so-called “product(s) concerned”), which may then subsequently be subjected to anti-dumping measures, need to be identified.42 As the “product concerned”-analysis is also of relevance in determining whether the Union industry has suffered injury, the relevant criteria in defining the “product concerned” will be presented in more detail in the corresponding section below. As a first step in establishing the existence of dumping, the normal value needs to be determined. Pursuant to Article 2 (1) BADR, the normal value shall normally be based on the prices paid or payable, in the ordinary course of trade, by independent customers in the exporting country.43 In a number of instances, this may not be possible. It may for example be the case that the exporting producer does not produce or does not sell the like product in the exporting country. In this case, normal value may be established on the basis of prices of other sellers or producers.44 Another situation where normal value will not be determined on the basis of the exporting producer’s prices in his home country is where there are no sufficient sales of the like product in the ordinary course of trade or where, because of a particular market situation, such sales do not permit a proper comparison. Here, the normal value will be constructed 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, or on the basis of the export prices, in the ordinary course of trade, to an appropriate third country, provided that those prices are representative.45 Once normal value has been established, the export price must be determined. That is the price actually paid or payable for the product when sold for export from the exporting country to the Union.46 Where there is no export price or the export

40

Cf. above p. 14. Cf. Article 2 (12) BADR. 42 General Court, judgment of 18 November 2014, case T-394/13, ECLI:EU:T:2014:964, Photo USA Electronic Graphic, Inc. v Council, para. 29. The anti-dumping measures may not be extended to products other than the product or products concerned, cf. European Court of Justice, judgment of 15 October 2020, case C-117/19, ECLI:EU:C:2020:833, “Linas Agro” AB v Muitinės departamentas prie Lietuvos Respublikos finansų ministerijos, para. 46 and the case law cited. 43 Article 2 (1) subpara. 1 BADR. 44 Article 2 (1) subpara. 2 BADR. 45 Article 2 (3) BADR. 46 Article 2 (6) BADR. 41

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price is considered to be unreliable, it may be constructed on the basis of the alternative calculation methods included in Article 2 (9) BADR.47 In a third step, a “fair comparison” between the export price and the normal value must be made. Pursuant to Article 2 (10) BADR, the comparison shall be made at the same level of trade and in respect of sales made at, as closely 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 are not on such a comparable basis, adjustments should be made for those factors which affect prices and price comparability. Such factors may be physical characteristics, import charges and indirect taxes, discounts, rebated and quantities, differences in the level of trade, transport, insurance, handling, loading and ancillary costs, packing, cost of credit, as well as after-sales costs such as commissions or currency conversions.48 Regard may also be had to other factors provided it is demonstrated that they affect price comparability.49 Thus, adjustments made in the construction of the export price under Article 2 (9) BADR are intended to determine the export price corresponding to normal trading conditions, the adjustments made under Article 2 (10) BADR are intended to adjust the export price or the normal value calculated pursuant to the rules laid down in Article 2 (1) to (9) of that regulation.50 Once this comparison has been carried out, the dumping margin may be established. The dumping margin is the amount by which the normal value exceeds the export price.51 A distinction should be drawn, however, between the dumping amount and the dumping margin: the comparison of the normal value with the export price will give the dumping amount by subtracting the export price from the normal value.52 The dumping margin, in turn, is the dumping amount as a percentage of the value of the CIF export price (duty unpaid) at the EU border.53

2.3.2.1.2

The “New Methodology” of Article 2 (6a) BADR

The imposition of anti-dumping measures concerning products originating in non-market economy countries has become increasingly relevant, especially in the years following the global economic and financial crisis between 2007 and 2009.54 During this period, the vast majority of measures was directed against products

47

Article 2 (9) BADR. Article 2 (10) (a) to (j) BADR. 49 Article 2 (10) (k) BADR. 50 General Court, judgment of 14 December 2022, case T-586/14 RENV II, ECLI:EU:T:2022:799, Xinyi PV Products v Commission, paras. 37 et seq. 51 Article 2 (12) BADR. 52 Mueller et al. (2009), para. 2.321. 53 Bungenberg and Reinhold (2021), para. 354. 54 MacLean (2012), p. 189 et seq. (194); cf. also above p. 6. 48

2.3

Secondary Law

29

originating in China, which accounted—and continues to account—for a major proportion of the trade defence measures imposed by the EU.55 Before the reform of the non-standard methodology used in calculating normal value by Regulation (EU) 2017/2321 entered into force, China could be treated as a non-market economy in proceedings carried out under the anti-dumping regulation. This frequently resulted in extremely high dumping margins, as the regulation provided for a number of special options concerning the calculation of normal value in anti-dumping proceedings with regard to products originating in non-market economies. Prior to its modernization, Article 2 (7) BADR permitted having recourse to alternative sources in calculating normal value in order to allow for an accurate calculation of the dumping margin also for non-market economies, the underlying assumption being that the State’s intervention in the economy rendered domestic prices and costs unreliable. Instead, normal value was to be determined on the basis of the price or constructed value in an appropriate representative country, or the price from such a third country to other countries or any other reasonable basis. This also included the prices actually paid or payable for the like product in the EU.56 As indicated above, the use of such alternative sources in the calculation of normal value generally resulted in very high dumping margins and, consequently, led to the imposition of higher anti-dumping duties than would have been the case if the exporting producers’ domestic prices or costs had been used in the normal value calculation. Thus, the application of the so-called “non-market economy methodology” or “analogue country methodology” was highly advantageous for the complainant EU industry.57 At the end of 2017, the calculation of normal value in anti-dumping proceedings was reformed by Regulation (EU) 2017/2321. The modernization was intended to counteract the possible WTO incompatibility of the continued application of the analogue country methodology with regard to China following the lapse of the deadline set out in Article 15 lit. d) of the 2001 Chinese Accession Protocol to the WTO.58 Essentially, the Protocol permitted the treatment of China as a non-market economy when determining price comparability in anti-dumping proceedings, however only for a period of 15 years. Accordingly, most legal scholars were of the opinion that the continued application of the analogue country methodology beyond that timeframe would violate WTO law.59

55 Cf. the statistics provided in European Commission, Commission Staff Working Document Accompanying the 39th Annual Report from the Commission to the Council and the European Parliament on the EU’s Anti-Dumping, Anti-Subsidy and Safeguard activities and the Use of trade defence instruments by Third Countries targeting the EU in 2020 (COM(2021) 496 final) (SWD (2021) 234 final), p. 5: of 128 anti-dumping measures in force at the end of 2020, 91 concerned imports originating in China. 56 Indeed, this methodology remains in application for imports from countries not members of the WTO and listed in Annex I to Regulation (EU) 2015/755, Article 2 (7) BADR, cf. also below p. 35. 57 Yalcin et al. (2016), p. 6. 58 World Trade Organization, Accession of the People’s Republic of China (WT/L/432). 59 Cf. e.g. Herrmann and Müller (2017), p. 500 et seq.; Vermulst et al. (2016), p. 212 et seq.; Vermulst and Sud (2018), p. 237 et seq.

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Before the reform, the application of alternative calculation methodologies was dependent upon the country of export being considered a non-market economy country. The 2017 reform of the normal value calculation methodologies supplements the catalogue of methods used in calculating normal value, adding the possibility for the investigating authority to resort to alternative calculation methods irrespective of whether the country of export is considered to be a non-market economy country or not; instead, formally, all countries are treated equally. However, Article 2 (6a) (a) BADR prescribes that where the Commission determines that it is not appropriate to use domestic prices and costs in the exporting country due to the existence of what is referred to as “significant distortions”, normal value shall be constructed exclusively on the basis of costs of production and sales reflecting undistorted prices or benchmarks.60 Pursuant to the provision, significant distortions are distortions that occur when reported prices or costs, including the costs of raw materials and energy, are not the result of free market forces because they are affected by substantial government intervention. Article 2 (6a) (b) BADR contains a non-exhaustive list of elements the Commission may have regard to in assessing the existence of significant distortions. These criteria include inter alia – the market in question being served to a significant extent by State-owned enterprises; – State presence in firms allowing the State to interfere with respect to prices or costs; – public policies or measures discriminating in favour of domestic suppliers or otherwise influencing free market forces; – The lack, discriminatory application or inadequate enforcement of bankruptcy, corporate or property laws; – wage costs being distorted; and – access to finance granted by institutions which implement public policy objectives or otherwise not acting independently of the State. The criteria do not have to be fulfilled cumulatively.61 Where the Commission has well-founded indications of the existence of significant distortions, and where appropriate for the effective application of the basic antidumping regulation, the Commission may produce public reports on the situation in the respective country or sector, Article 2 (6a) (c) BADR. These reports are to be updated regularly.62 At the time of writing, the Commission has published reports

60

Cf. the alternative sources mentioned in Article 2 (6a) (a) BADR and below p. 35. Confirmed by the Commission e.g. in Commission Implementing Regulation (EU) 2020/1336 of 25 September 2020 imposing definitive anti-dumping duties on imports of certain polyvinyl alcohols originating in the People’s Republic of China, OJ EU 2020 L 315/1, recital 89. 62 Recital 4 to Regulation (EU) 2017/2321 of the European Parliament and of the Council of 12 December 2017 amending Regulation (EU) 2016/1036 on protection against dumped imports from countries not members of the European Union and Regulation (EU) 2016/1037 on protection against subsidised imports from countries not members of the European Union, OJ EU 2017 L 338/1. 61

2.3

Secondary Law

31

concerning the existence of significant distortions within the meaning of Article 2 (6a) (b) BADR in the Chinese economy and in the Russian economy.63 The Commission’s report on the existence of distortions in the Chinese economy includes references to Commission findings made during the application of the old analogue country methodology of Article 2 (7) BADR. Accordingly, parts of the information included in the report were already several years old when the report was published.64 It remains to be seen whether, in light of the Commission being obliged to update the reports and the information contained therein, these old—and thus potentially outdated—findings would also be included in a revised version of the report on the existence of significant distortions in the Chinese economy. Whether the reformed non-standard methodology in calculating normal value complies with the requirements of WTO law is also controversial, with multiple legal scholars contesting its WTO compatibility.65 As can be inferred from the above, Regulation (EU) 2017/2321 did not enter into force until well after the lapse of the deadline contained in Article 15 (d) of the Chinese Protocol of Accession to the WTO. Unsurprisingly, China initiated proceedings against the EU’s continued application of the old analogue country methodology before the WTO DSB, as well as against the new methodology of Article 2 (6a) BADR.66 However, as proceedings before the DSB were suspended upon request by China in May 2019 and were not reinstated, the authority for the establishment of the panel lapsed in June 2020. Consequently, the WTO legality of the EU’s anti-dumping practice was not clarified. Given that the WTO dispute settlement system as a whole remains largely dysfunctional, the questions surrounding the WTO compatibility of the EU’s normal value calculation methodologies cannot be expected to be resolved in the foreseeable future—despite the fact that the WTO illegality of the EU’s framework in that regard is regularly challenged before the EU judiciary, too.67

63

European Commission, Commission Staff Working Document on Significant Distortions in the Economy of the People’s Republic of China for the Purposes of Trade Defence Investigations (SWD(2017) 483 final/2); European Commission, Commission Staff Working Document on Significant Distortions in the Economy of the Russian Federation for the Purposes of Trade Defence Investigations (SWD(2020) 242 final). 64 Cf. e.g. the references to the findings in Council Implementing Regulation (EU) No. 1239/2013 of 2 December 2013 imposing a definitive countervailing duty on imports of crystalline silicon photovoltaic modules and key components (i.e. cells) originating in or consigned from the People’s Republic of China, European Commission, Commission Staff Working Document on Significant Distortions in the Economy of the People’s Republic of China for the Purposes of Trade Defence Investigations (SWD(2017) 483 final/2), fn. 158. 65 Cf. e.g. Huyghebaert (2019), p. 417 et seq.; Suse (2017), pp. 951, 956–963; Wüstenberg (2019), p. 407 et seq. 66 Request for composition of a panel of 29 June 2017, WT/DS516, European Union – Measures Related to Price Comparison Methodologies. 67 Cf. for a more recent example Case C-123/21 P, Changmao Biochemical Engineering Co. (appeal against the judgment of 16 December 2020 of the General Court in T-541/18, ECLI:EU:T:2020: 605.

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While the methodology introduced by Article 2 (6a) BADR is still relatively new, one can nonetheless make a number of observations relating to the Commission’s practice in applying the new methodology. First of all, while it formally is upon the EU industry to provide sufficient evidence justifying the application of the non-standard methodology in calculating normal value,68 in practice, it does not bear any additional burden: the past years have shown that it is sufficient for the complainants to refer to the information contained in the respective Commission report in order for the new methodology to be applied. Thus, in effect, the Commission reports create a rebuttable presumption of the existence of significant distortions in the economy of the country that is the subject of the Commission’s respective report.69 Likewise, as a result of the Commission’s heavy reliance on the Commission reports, the arguments submitted by the complainants relating to the existence of significant distortions are near to irrelevant.70 In addition to the criteria contained in Article 2 (6a) (b) BADR, the Commission may also have regard to the level of social and environmental protection prevailing in the country of export when deciding upon the existence of significant distortions.71 In practice, however, although the list of criteria contained in Article 2 (6a) (b) BADR is not exhaustive, the Commission will usually limit itself to an assessment of these criteria in its investigations, for the sake of legal certainty.72 This is not surprising, as the Commission likewise focusses on the criteria explicitly mentioned in Article 2 (6a) (b) BADR in its reports on the existence of significant distortions in the Chinese and the Russian economy. Given the Commission’s heavy reliance on these reports during the investigations where Article 2 (6a) BADR is applied, it is only logical that the Commission’s practice in individual investigations likewise focusses on the criteria it already assessed in the respective report. Conversely, social and environmental factors have not played a decisive role in the application of the new methodology until now. This was to be expected, as the Commission’s country reports do not dedicate separate sections to an assessment of the level of social and environmental protection prevailing in Russia and China. Instead, the assessment of social and environmental concerns is integrated in the examination of the other criteria included in Article 2 (6a) BADR. For example, the protection of workers’ rights in China and Russia is addressed as part of the

68

Article 2 (6a) (e) and Article 5 (9) BADR. Shadikhodjaev (2018), pp. 885, 898. 70 Trapp (2022), p. 187. 71 Recital 4 to Regulation (EU) 2017/2321 of the European Parliament and of the Council of 12 December 2017 amending Regulation (EU) 2016/1036 on protection against dumped imports from countries not members of the European Union and Regulation (EU) 2016/1037 on protection against subsidised imports from countries not members of the European Union, OJ EU 2017 L 338/1. 72 Cf. Reinhold and Van Vaerenbergh (2021), pp. 193, 195. 69

2.3

Secondary Law

33

Commission’s analysis into wage costs in the two economies;73 and the level of environmental protection in Russia is examined within the chapter addressing the development of a land market and potential distortions in land prices.74 Thus, should the Commission adhere to the approach it has chosen to follow so far, the criteria relevant in examining the existence of significant distortions are limited to those explicitly listed in Article 2 (6a) (b) BADR. In those investigations where Article 2 (6a) BADR is applied, the Commission addresses each of the six criteria mentioned in Article 2 (6a) (b) BADR. The level of detail with which each of these criteria are examined varies. This is particularly evident in the Commission’s practice in applying the new methodology to products originating in China. Here, general remarks on the Chinese economic system will be followed by findings regarding the presence of State-owned enterprises on the Chinese market. In particular investigations concerning the iron and steel sector or the sector of non-iron metals usually include sector-specific findings.75 Where this is not the case, the Commission’s line of reasoning included in the implementing regulation is frequently a near verbatim reproduction of the corresponding sections from the Commission Report on the existence of significant distortions in the Chinese economy, with only a brief analysis of the situation in the industry sector concerned by the anti-dumping investigation being provided.76 Conversely, the Commission’s findings concerning State presence in firms allowing the State to interfere with respect to prices or costs are sector-specific and contain detailed information on the policy measures in force in the respective industry sector. The

73

European Commission, Commission Staff Working Document on significant distortions in the economy of the Russian Federation for the purposes of trade defence investigations, 20 December 2017, SWD(2017) 438 final/2, p. 328 et seq. 74 European Commission, Commission Staff Working Document on significant distortions in the economy of the Russian Federation for the purposes of trade defence investigations, 22 October 2020, SWD(2020) 242 final, p. 184 et seq. 75 Cf. e.g. Commission Implementing Regulation (EU) 2021/582 of 9 April 2021 imposing a provisional anti-dumping duty on imports of aluminium flat-rolled products originating in the People’s Republic of China, OJ EU 2021 L 124/40, recitals 133–137; Commission Implementing Regulation (EU) 2020/508 of 7 April 2020, imposing a provisional anti-dumping duty on imports of certain hot rolled stainless steel sheets and coils originating in Indonesia, the People’s Republic of China and Taiwan, OJ EU 2020 L 110/3, recitals 115–127. 76 Cf. e.g. Commission Implementing Regulation (EU) 2020/1534 of 21 October 2020 imposing a definitive anti-dumping duty on imports of certain prepared or preserved citrus fruits (namely mandarins, etc.) originating in the People’s Republic of China following an expiry review pursuant to Article 11(2) of Regulation (EU) 2016/1036 of the European Parliament and of the Council, OJ EU 2020 L 351/2, recitals 59–67 and recitals 68–70; Commission Implementing Regulation (EU) 2020/492 of 1 April 2020 imposing definitive anti-dumping duties on imports of certain woven and/or stitched glass fibre fabrics originating in the People’s Republic of China and Egypt, OJ EU 2020 L 108/1, recitals 109–115 and 116–119; Commission Implementing Regulation (EU) 2019/1662 of 1 October 2019 imposing a definitive anti-dumping duty on imports of ironing boards originating in the People’s Republic of China following an expiry review pursuant to Article 11(2) of Regulation (EU) 2016/1036 of the European Parliament and of the Council, OJ EU 2019 L 252/1, recitals 51–57 and recitals 58–62.

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same holds true for the criterion of public policies or measures discriminating in favour of domestic suppliers or otherwise influencing free market forces.77 Opposite to the relatively detailed assessment of the first three criteria listed in Article 2 (6a) (b) BADR, the reasoning relating to the criteria of the lack, discriminatory or inadequate enforcement of bankruptcy, corporate or property laws, distortion of wage costs and access to finance included in Article 2 (6a) (b) BADR must be described as generic. Here, absent any information to the contrary, the Commission will simply assume that the findings in the Commission report also apply to the sector at hand.78 This can be attributed to the fact that the first three criteria named in Article 2 (6a) (b) BADR are more sector-specific in themselves whereas the last three criteria concern the conditions prevailing country-wide.79 Moreover, in more recent investigations, the Commission has also referenced its conclusions in previously completed anti-dumping investigations concerning similar products when establishing the existence of significant distortions. The expiry review concerning Molybdenum Wire (China) serves as an example in this regard. Here, the Commission considered that in light of its findings in recent investigations concerning the tungsten sector in China, and as most producers of molybdenum products also process tungsten in their plants, it would be appropriate to also rely on these findings in the investigation at hand. Accordingly, when establishing the existence of significant distortions in the molybdenum sector, the Commission relied heavily on its findings concerning the Chinese tungsten industry.80 77 Cf. e.g. Commission Implementing Regulation (EU) 2020/1428 of 12 October 2020 imposing a provisional anti-dumping duty on imports of aluminium extrusions originating in the People’s Republic of China, OJ EU 2020 L 336/8, recitals 105–112 and 113–135; Commission Implementing Regulation (EU) 2020/1136 of 25 September 2020 imposing definitive anti-dumping duties on imports of certain polyvinyl alcohols originating in the People’s Republic of China, OJ EU 2020 L 315/1, recitals 137–141 and 142–151; Commission Implementing Regulation (EU) 2020/508 of 7 April 2020 imposing a provisional anti-dumping duty on imports of certain hot rolled stainless steel sheets and coils originating in Indonesia, the People’s Republic of China and Taiwan, OJ EU 2020 L 110/3, recitals 128–132 and 133–138. 78 Cf. e.g. the Commission’s practice with regard to the criterion of wage costs being distorted: here, no additional, sector-specific information will be provided. Instead, the distortion of wage costs will be inferred from the fact that the industry sector concerned is also subject to the Chinese labour law system, cf. e.g. Commission Implementing Regulation (EU) 2021/582 of 9 April 2021 imposing a provisional anti-dumping duty on imports of aluminium flat-rolled products originating in the People’s Republic of China, OJ EU 2021 L 124/40, recitals 172–173; Commission Implementing Regulation (EU) 2019/1267 of 26 July 2019 imposing a definitive anti-dumping duty on imports of tungsten electrodes originating in the People’s Republic of China following an expiry review under Article 11(2) of Regulation (EU) 2016/1036, OJ EU 2019 L 200/4, recitals 78–80. The same generic reasoning is applied with regard to the criterion of the lack, discriminatory or inadequate enforcement of bankruptcy, corporate or property laws, cf. e.g. Commission Implementing Regulation (EU) 2020/1136 of 25 September 2020 imposing definitive anti-dumping duties on imports of certain polyvinyl alcohols originating in the People’s Republic of China, OJ EU L 315/1, recitals 152–155. 79 Reinhold and Van Vaerenbergh (2021), pp. 193, 196. 80 Commission Implementing Regulation (EU) 2022/1305 of 25 July 2022 imposing a definitive anti-dumping duty on imports of molybdenum wire originating in the People’s Republic of China

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An exporting producer may rebut the Commission’s findings and argue that his individual price and cost structure remains unaffected by the significant distortions.81 However, the chances of success for an individual exporter being able to produce sufficient evidence supporting its claim to overturn the Commission’s findings are slim.82 Once the Commission has established that significant distortions exist in the country of export, normal value will be calculated using one of the methods referenced in Article 2 (6a) (a) BADR: Corresponding costs of production and sale in an appropriate representative country with a similar level of economic development as the exporting country, provided the relevant data are readily available; where there is more than one such country, preference shall be given, where appropriate, to countries with an adequate level of social and environmental protection; undistorted international prices, costs or benchmarks; or domestic costs, but only to the event that they are positively established not to be distorted, on the basis of accurate and appropriate evidence. In practice, the Commission will usually calculate normal value on the basis of the corresponding costs of production and sale in an appropriate representative country. The Commission will however combine the different approaches included in Article 2 (6a) (a) BADR and replace the costs of single factors of production in the representative country with international benchmarks where it considers it inappropriate to use the prices in the representative country.83 At the time of writing, a

following an expiry review pursuant to Article 11 (2) of Regulation (EU) 2016/1036 of the European Parliament and of the Council, OJ EU 2022 L 197/55; cf. also Commission Implementing Regulation (EU) 2022/802 of 20 May 2022 imposing a provisional anti-dumping duty on imports of electrolytic chromium coated steel products originating in the People’s Republic of China and Brazil, OJ EU 2022 L 143/11, recitals 45 et seq.; Commission Implementing Regulation (EU) 2022/ 403 of 9 March 2022 imposing a definitive anti-dumping duty on imports of certain aluminium foil originating in the People’s Republic of China following an expiry review pursuant to Article 11 (2) of Regulation (EU) 2016/1036, OJ EU 2020 L 83/7, recitals 35 et seq. 81 Cf. Article 2 (6a) (a) BADR: “Without prejudice to Article 17, that assessment shall be done for each exporter and producer separately”. 82 Cf. e.g. Commission Implementing Regulation (EU) 2021/546 of 29 March 2021 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of aluminium extrusions originating in the People’s Republic of China, OJ EU 2021 L 109/1, recitals 96 et seq; Commission Implementing Regulation (EU) 2020/1428 of 12 October 2020 imposing a provisional anti-dumping duty on imports of aluminium extrusions originating in the People’s Republic of China, OJ EU 2020 L 336/8, recitals 76 et seq. 83 Cf. e.g. Commission Implementing Regulation (EU) 2020/776 of 12 June 2020 imposing definitive countervailing duties on imports of certain woven and/or stitched glass fibre fabrics originating in the People’s Republic of China and Egypt and amending Commission Implementing Regulation (EU) 2020/492 imposing definitive anti-dumping duties on imports of certain woven and/or stitched glass fibre fabrics originating in the People’s Republic of China and Egypt, OJ EU 2020 L 189/1, recitals 192, 229; Commission Implementing Regulation (EU) 2019/1693 of 9 October 2019 imposing a provisional anti-dumping duty on imports of steel road wheels originating in the People’s Republic of China, OJ EU 2019 L 259/15, recitals 137–140, 158.

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difference in the level of social and environmental protection has only informed the Commission’s selection of the representative country in one instance.84 Regulation (EU) 2017/2321 considerably narrowed the scope of application of Article 2 (7) BADR: Following the entry into force of the Regulation, the provision only applies to countries which are not members to the WTO. Accordingly, recourse to prices or constructed value in an appropriate representative country may only be had where a country is not member of the WTO and at the same time is listed in Annex I to Regulation (EU) 2015/755 on common rules for imports from certain third countries.85 As already mentioned, a formal distinction between market economy and non-market economy countries is no longer made. Currently, Article 2 (7) BADR can be applied to investigations concerning imports originating in Azerbaijan, Belarus, North Korea, Turkmenistan and Uzbekistan.

2.3.2.1.3

Injury

The existence of dumping alone does not justify the imposition of anti-dumping measures. In addition, the EU industry has to sustain injury within the meaning of Article 3 (1) BADR. Pursuant to Article 3 (1) BADR, the term “injury” encompasses material injury to the Union industry, threat of material injury to the Union industry or the material retardation of the establishment of such an industry.86 Central to a finding of “injury” is the definition of the “Union industry” as set out in Article 4 BADR.87 As a rule, this notion refers to all the Union producers as a whole of the like products or to those of them whose collective output of the products constitutes a major proportion of the total Union production of those products.88 Producers who are related to the exporters or importers, or are themselves importers of the allegedly dumped product, can be excluded from the notion of “Union industry”.89 In light of the progressing liberalization of international trade and the ensuing globalization of firms’ commercial operations, nowadays, the imposition of anti-dumping measures regularly creates conflicts between those EU producers who manufacture their products wholly or in part outside the EU and those who do not.

84

Commission Implementing Regulation (EU) 2019/687 of 2 May 2019 imposing a definitive antidumping duty on imports of certain organic coated steel products originating in the People’s Republic of China following an expiry review pursuant to Article 11 (2) of Regulation (EU) 2016/1036 of the European Parliament and of the Council, OJ EU 2019 L 116/5, recitals 110–112. 85 Regulation (EU) 2015/755 of the European Parliament and of the Council of 29 April 2015 on common rules for imports from certain third countries, OJ EU 2015 L 123/33. 86 For details cf. Van Bael and Bellis (2019), §§ 4.9–4.15. 87 On the notion of “Union industry”: Tietje and Kluttig (2008), p. 89 et seq.; Van Bael and Bellis (2019), § 4.4. 88 Article 4 (1) BADR. 89 Article 4 (1) (a), (2) BADR.

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As can be inferred from the above, in order to establish whether the Union industry has indeed suffered injury, it has to be determined that the product produced by the Union industry and the products concerned are “like”. Article 1 (4) BADR provides that, for the purposes of the BADR, a product will be considered as being “like” where it is identical, that is to say, alike in all respects, to the product under consideration, or in the absence of such a product, another product which, although not alike in all respects, has characteristics closely resembling those of the product under consideration. In a first step, the product concerned has to be defined. The “product concerned” describes the product which is considered as being dumped.90 Accordingly, the definition of the product concerned is essential in defining the scope of the anti-dumping investigation. For the purposes of defining the product concerned, it is assessed inter alia whether the exported products share the same physical, technical and chemical characteristics, and whether they are employed for the same use. Furthermore, interchangeability between products, consumer perception, distribution channels, manufacturing processes as well as cost of production and quality may be of relevance in determining which products fall within the scope of the anti-dumping investigation.91 These criteria are only indicative and the Commission is not obliged to make use of all of them.92 In practice, in particular the question of whether the products share the same physical characteristics and the products’ main uses and applications are relevant in determining whether products come within the scope of the anti-dumping investigation.93 After the products concerned by the anti-dumping investigation have been delineated, it has to be established whether the products produced and sold by the Union industry are “like”. The criteria used during this analysis correspond to the ones used when establishing which products fall within the products concerned by the antidumping investigation.94 Once it has been established which of the exported goods are products concerned by the anti-dumping investigation, and that the product produced and sold by the Union industry are indeed “like”, it is to be examined whether the Union industry was injured as a result of the importation of dumped products on the internal market.

Van Bael and Bellis (2019), § 4.02. General Court, judgment of 18 November 2014, case T-394/13, ECLI:EU:T:2014:964, Photo USA Electronic Graphic, Inc. v Council, para. 29; European Court of Justice, judgment of 18 April 2013, case C-595/11, ECLI:EU:C:2013:251, Steinel Vertrieb GmbH v Hauptzollamt Bielefeld, para. 44; General Court, judgment of 13 September 2010, case T-314/06, ECLI:EU:T:2010:390, Whirlpool Europe Srl v Council, para. 138. 92 Council Implementing Regulation (EU) 1238/2013 of 2 December 2013 imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of crystalline silicon photovoltaic modules and key components (i.e. cells) originating in or consigned from the People’s Republic of China, OJ EU 2013 L 325/1, recital 44; cf. also e.g. General Court, judgment of 4 March 2010, case T-401/06, ECLI:EU:T:2010:67, Brosmann Footwear (HK) Ltd. And others v Council, paras. 131–137. 93 Van Bael and Bellis (2019), § 4.02 [A]. 94 Hoffmeister, in: Krenzler/Herrmann/Niestedt (eds) (2018), Artikel 1 AD-GVO, paras. 52–56. 90 91

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As indicated above, Article 3 (1) BADR provides for three alternative situations where it will be considered that the Union industry has suffered injury: material injury, threat of material injury or the material retardation of the establishment of a Union industry. The determination of injury requires the appraisal of complex economic situations. Accordingly, the Commission enjoys a wide discretion, and judicial review of the Commission’s injury assessment is limited to establishing whether relevant procedural rules have been complied with, whether the facts relied on have been accurately stated and whether there has been a manifest error in the appraisal of those facts or a misuse of powers.95 This discretion also extends to the determination of the period to be taken into consideration for the purposes of determining injury in anti-dumping proceedings.96 The provisions of Article 3 (2)-(10) BADR laying down the criteria upon which a finding of injury is to be based likewise are of relevance in determining the injury sustained by the EU industry. Most importantly, pursuant to Article 3 (2) BADR, a determination of injury shall be based on positive evidence and shall involve an objective examination of the volume of the dumped imports and the effect of the dumped imports on prices in the Union market for like products and the consequent impact of those imports on the Union industry. When examining the volume of the dumped imports, the Commission will examine whether there has been a significant increase in dumped imports, either in absolute terms or relative to production or consumption in the EU.97 The increase in volume must occur over a longer period of time. A one-time increase in imports will usually not suffice for the Commission to conclude that the dumped imports are causing injury to the EU industry. In practice, relying on data by the Statistical Office of the European Union (Eurostat)98 and/or industry associations, the Commission will usually analyse how the volume and market share of the imports from the country concerned have developed over the last three years preceding the period chosen for the injury assessment.99 It should be noted that a reduction in the market

95

General Court, judgment of 24 September 2019, case T-500/17, ECLI:EU:T:2019:691, Hubei Xinyegang Special Tube Co. Ltd v Commission, paras. 33, 34; General Court, judgment of 15 March 2018, case T-211/16, ECLI:EU:T:2018:148, Caviro Distillerie Srl et al v Commission, paras. 34 et seq. 96 General Court, judgment of 20 May 2015, case T-310/12, ECLI:EU:T:2015:295, EU:T:2015: 295, Yuanping Changyuan Chemicals v Council, para. 110. 97 Article 3 (3) BADR. 98 Affirmed in General Court, judgment of 19 May 2021, case T-251/18, ECLI:EU:T:2021:278, China Chamber of Commerce for Import and Export of Machinery and Electronic Products, para. 156 and European Court of Justice, judgment of 22 March 2012, C-338/10, ECLI:EU:2012:158, GLS, para. 30. 99 Cf. e.g. Commission Implementing Regulation (EU) 2021/110 of 5 July 2021 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of certain hot-rolled flat products of iron, non-alloy or other alloy steel originating in Turkey, OJ EU 2021 L 238/32, recitals 149–154; Commission Implementing Regulation (EU) 2021/983 of 17 June 2021 imposing a provisional anti-dumping duty on imports of aluminium converter foil originating in the People’s Republic of China, OJ EU 2021 L 216/142, recitals 260–267.

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share held by the dumped imports does not preclude a finding that they have caused significant injury. This however requires that the injury finding is not solely based on the findings regarding the volume of dumped imports, but on various of the factors included in Article 3 (2) BADR.100 Injury will normally101 be regarded as negligible where the market share held by the dumped imports does not surpass 1%, unless the dumped imports account for 3% or more of Union consumption.102 When analysing the effect on prices within the EU, the Commission will examine whether there has been significant price undercutting by the dumped imports when compared to the prices charged by the Union industry.103 The basic regulation does not contain any definition of the concept of price undercutting and does not lay down any method for the calculation of the level thereof. However, the Commission is obligated to carry out an objective examination of the impact of the dumped imports, and to make a fair comparison between the price of the product concerned and the price of the like product of that industry when sold in the territory of the Union.104 Even where there is no price undercutting on part of the dumped imports, their effect on prices may nonetheless be such as to depress prices to a significant degree or prevent price increases, which would otherwise have occurred, to a significant degree105 (“price underselling”). In calculating the underselling margin, the prices of the dumped imports will be compared with a target price. The target price represents the price which the Union industry would be able to achieve absent the price pressure exerted by the presence of the dumped products.106 The same time span selected for an evaluation of the development of the volume, the market shares and the prices of dumped imports will then be chosen to examine the development of the economic situation of the Union industry in accordance with

100

General Court, judgment of 30 March 2000, case T-51/96, ECLI:EU:T:2000:92, Miwon Co. Ltd v Council, para. 105. Cf. also General Court, judgment of 15 October 2020, case T-307/18, ECLI: EU:T:2020:487, Zhejiang Jiuli Hi-Tech Metals Co. Ltd v Commission, para. 267. 101 This does not exclude that, in exceptional circumstances, imports below or above 1% may be considered as causing (non-)negligible industry. In Flat Steel Products, the Commission terminated the investigation on imports originating in Serbia as Serbian imports into the EU only had a market share of 1,04%. The Commission found that this was still negligible because “0,04% should be regarded as immaterial, in particular when, in relative terms, Serbian import volumes are considerably lower than the volumes from each of the four other countries [under investigation]”, Commission Implementing Regulation (EU) 2017/1795 of 5 October 2017 imposing a definitive anti-dumping duty on imports of certain hot-rolled flat products of iron, non-alloy or other alloy steel originating in Brazil, Iran, Russia and Ukraine and terminating the investigation on imports of certain hot-rolled flat products of iron, non-non alloy or other alloy steel originating in Serbia, OJ EU 2017 L 258/24, para. 232. 102 Article 9 (3) BADR in conjunction with Article 5 (9) BADR. 103 Article 3 (3) BADR. 104 This requires, inter alia, that the comparison must be made at the same level of trade, General Court, judgment of 10 April 2019, case T-301/16, ECLI:EU:T:2019:234, Jindal Saw Ltd and Jindal Saw Italia SpA v European Commission, paras. 175 et seq. 105 Article 3 (3) BADR. 106 Van Bael and Bellis (2019), § 7.04 [A] [2].

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the non-exhaustive list of indicators included in Article 3 (5) BADR. Macroeconomic indicators which will usually be taken into consideration by the Commission include production, production capacity and capacity utilisation, sales volume and market shares held by the Union industry, growth of the Union industry as well as employment and productivity. The magnitude of the dumping margin and whether the Union industry is still recovering from past instances of dumping are other macroeconomic indicators considered by the Commission. Among the microeconomic indicators relevant in assessing how the economic situation of the Union industry has developed are prices and factors affecting prices, labour costs, inventory, as well as profitability, cash flow, investments, return on investments and ability to raise capital.107 Investments that were made to comply with statutory requirements will not be taken as indicative of the economic situation of the Union industry improving.108

2.3.2.1.4

Causality

Once the existence of injury is established, it must further be demonstrated that a causal link between the presence of the dumped imports on the internal market and the injury sustained by the Union industry exists. Specifically, this shall entail demonstrating that the volume and/or price levels of dumped imports as identified during the injury assessment are responsible for the impact on the Union industry as provided for in Article 3 (5) BADR. This impact has to be material.109 Accordingly, as is already apparent from the basic regulation itself, the evidence of injury is also taken into consideration in the Commission’s analysis of the causal link. This entails, inter alia, for the comparison between the price levels of the product concerned and

107 Commission Implementing Regulation (EU) 2021/939 of 10 June 2021 imposing a provisional anti-dumping duty on imports of mono ethylene glycol originating in the United States of America and the Kingdom of Saudi Arabia, OJ EU 2021 L 205/4, recitals 169–201; Commission Implementing Regulation (EU) 2021/983 of 17 June 2021 imposing a provisional anti-dumping duty on imports of aluminium converter foil originating in the People’s Republic of China, OJ EU 2021 L 216/142, recitals 268–302. 108 Cf. e.g. Commission Implementing Regulation (EU) 2019/1259 of 24 July 2019 imposing a definitive anti-dumping duty on imports of threaded tube or pipe cast fittings, of malleable cast iron and spheroidal graphite cast iron, originating in the People’s Republic of China and Thailand, following an expiry review pursuant to Article 11(2) of Regulation (EU) 2016/1036 of the European Parliament and of the Council, OJ EU 2019 L 197/2, recital 237; Commission Implementing Regulation (EU) 2019/687 of 2 May 2019 imposing a definitive anti-dumping duty on imports of certain organic coated steel products originating in the People’s Republic of China following an expiry review pursuant to Article 11 (2) of Regulation (EU) 2016/1036 of the European Parliament and of the Council, OJ EU 2019 L 116/5, recital 212. Instead, the Commission will have regard to the return on investments in assessing the development of the economic situation of the EU industry over the period considered. 109 Article 3 (6) BADR.

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the prices charged by the Union industry to be taken into account when establishing the existence of a causal link under Article 3 (6) BADR.110 Conversely, the existence of other factors which are at the same time injuring the Union industry—and thus breaking the causal link between the presence of the dumped products and the injury sustained by the Union industry—shall also be examined by the Commission. Such factors shall include the volume and prices of imports not sold at dumping prices, contraction in demand or changes in patterns of consumption, restrictive practices of, and competition between, third country and Union producers, developments in technology and the export performance, and productivity of the Union industry.111 In this context, it should be noted that the fact that a Union producer is facing difficulties attributable in part to causes other than the dumping is not a reason for depriving that producer of all protection against the injury caused by the dumping.112 Accordingly, the EU institutions need to ascertain whether the effects of those other factors are such as to break the causal link between the imports and the injury suffered by the Union industry.113

2.3.2.1.5

Union Interest

Even where the Commission’s investigation has revealed the existence of dumping as well as the existence of injury to the EU industry brought about by the presence of dumped products, anti-dumping measures may not be imposed unless the so-called Union interest test yields a positive outcome. Pursuant to Article 21 (1) BADR, measures, as determined on the basis of the dumping and injury found, may not be applied where the authorities, on the basis of all the information submitted, can clearly conclude that it is not in the Union’s interest to apply such measures. This public interest test is frequently described as a “WTO plus”-element of EU trade defence law, as its application prior to the imposition of anti-dumping measures is not mandated by WTO law.114 It should be noted that the Union interest test is negative in its conception: unless the Commission can clearly establish that the imposition of measures would not

110

General Court, judgment of 19 May 2021, case T-254/18, ECLI:EU:T:2021:278, China Chamber of Commerce for Import and Export of Machinery and Electronic Products v Commission, para. 363; General Court, judgment of 24 September 2019, case T-500/17, ECLI:EU:T:2019:691, Hubei Xinyegang Special Tube Co. Ltd v Commission, paras. 57, 87. 111 Article 3 (7) BADR. 112 General Court, judgment of 11 July 2017, ECLI:EU:T:2017:481, Viraj Profiles Ltd v Council, para. 61; European Court of Justice, judgment of 5 October 1988, cases 277/85 and 300/85, ECLI: EU:C:1988:467, Canon and Others v Council, para. 62. 113 General Court, judgment of 11 July 2017, ECLI:EU:T:2017:481, Viraj Profiles Ltd v Council, para. 62. 114 Cf. e.g. European Commission, 27 July 2017, Report from the Commission to the Council and the European Parliament: Overview of Third Country Trade Defence Actions Against the European Union for the Year 2016 (SWD(2017) 277 final), COM(2017) 401 final, p. 2.

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serve the Union interest, the measures will be imposed. Accordingly, the Union interest test has only rarely resulted in the Commission refraining from the imposition of measures.115 More frequently, however, it will have an effect on the duration116 or the form117 of measures. The level of measures imposed will not be impacted by the Union interest test.118 The examination of the Union interest requires an evaluation of the likely consequences of both applying and of not applying the measures proposed while having regard to the interests of the various parties mentioned in Article 21 (1) BADR.119 The Union interest test requires the Commission to balance these interests in a transparent manner and to justify its findings, setting out the facts justifying the decision and the legal considerations on the basis of which it adopts its decisions.120 This weighing and balancing of interests as well as the procedural rules the Commission has to adhere to in carrying out its Union interest analysis are intended to ensure that the EU’s trade defence instruments are not applied for the sole benefit of the (complainant) EU industry, but instead serve the interests of the EU as a whole.121 Accordingly, it is an expression of the general principle of proportionality.122 As the Union interest test involves the appraisal of complex economic situations, the Commission enjoys a broad margin of discretion. Consequently, judicial review of the Union interest test is limited to verifying whether the procedural rules have been complied with, whether the facts on which the contested

115 Mueller et al. (2009), para. 21.62. The last investigation where the Union interest test resulted in the Commission refraining from the imposition of anti-dumping measures dates back to 2013, Commission Decision (EU) 81/2013 of 13 February 2013 terminating the anti-dumping proceeding concerning imports of white phosphorus, also called elemental or yellow phosphorus, originating in the Republic of Kazakhstan, OJ EU 2013 L 43/38, recitals 147 et seq and 190 et seq. 116 Cf. e.g. Commission Implementing Regulation (EU) 2017/366 of 1 March 2017 imposing definitive countervailing duties on imports of crystalline silicon photovoltaic modules and key components (i.e. cells) originating in or consigned from the People’s Republic of China following an expiry review pursuant to Article 18(2) of Regulation (EU) 2016/1037 of the European Parliament and of the Council and terminating the partial interim review investigation pursuant to Article 19(3) of Regulation (EU) 2016/1037, OJ EU 2017 L 56/1, recital 745. 117 Commission Implementing Regulation (EU) 2015/1953 of 29 October 2015 imposing a definitive anti-dumping duty on imports of certain grain-oriented flat-rolled products of silicon-electrical steel originating in the People’s Republic of China, Japan, the Republic of Korea, the Russian Federation and the United States of America, OJ EU 2015 L 284/109, recitals 110 et seq. 118 European Commission, DG Trade Working Document: Draft Guidelines on Union Interest (2013), para. 16. 119 General Court, judgment of 8 July 2003, Case T-132/01, ECLI:EU:T:2003:189, Euroalliages et al v Commission, para. 47. 120 General Court, judgment of 8 July 2003, Case T-132/01, ECLI:EU:T:2003:189, Euroalliages et al v Commission, para. 48. 121 Cf. already Wenig (1996), p. 215. 122 Hartmann (2018), Artikel 21 AD-GVO 2016, para. 47.

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choice is based have been accurately stated, and whether there has been a manifest error of assessment of those facts or a misuse of powers.123 In examining whether the Union’s interest calls for intervention, the Commission shall appreciate the various interests taken as a whole, including the interests of the domestic industry and users und consumers. The need to eliminate the trade distorting effects of injurious dumping and to restore effective competition shall be given special consideration.124 It has been consistently held by the EU Courts that an assessment of the Union interest also requires the interests of the various parties concerned to be balanced against the public interest.125 Article 21 (2) BADR stipulates that, in order to provide a sound basis on which the authorities can take account of all views and information in the decision as to whether or not the imposition of measures is in the Union’s interest, stakeholders who would be affected by the imposition of measures can make themselves known and provide information to the Commission. In a change brought about by Regulation (EU) 2018/825, trade unions are now among those who can provide information to the Commission. Moreover, any member of the Union industry now may provide information to the Commission. Before Regulation (EU) 2018/825 entered into force, this right was limited to the complainant members of the EU industry. Besides, importers and their representative associations, representative users and representative consumer organizations remain among the stakeholders named in Article 21 (2) BADR. Broadening the circle of those who can provide input to the Commission on the possible impact of the imposition of measures serves to provide the Commission with as complete a picture as possible of the impact the imposition of measures has on the internal market. In determining the Union interest test, the interests of the Union industry will be accorded special weight.126 As the Union industry usually will be in favour of the imposition of measures, this is another factor contributing to the relatively low efficacy of the Union interest test. Conversely, the interests of users, importers or consumers are only ascribed limited relevance.127 Once it has been established that the imposition of measures would serve the interests of the EU industry, arguments voiced by other market operators relating to the possible negative consequences the imposition of measures would have usually will not suffice for the Commission to conclude that these negative effects manifestly outweigh the benefits the imposition

123

General Court, judgment of 8 July 2003, Case T-132/01, ECLI:EU:T:2003:189, Euroalliages et al v Commission, para. 49; General Court, judgment of 15 October 1998, Case T-2/95, ECLI:EU: T:1998:242, Industrie des Poudres Sphériques v Council, para. 292. 124 Article 21 (1) BADR. 125 General Court, judgment of 25 October 2011, Case T-192/08, ECLI:EU:T:2011:619, Transnational Company ‘Kazchrome’ AO et al v Council, para. 240. 126 Cf. e.g. Commission Implementing Regulation (EU) 2020/508 of 7 April 2020 imposing a provisional anti-dumping duty on imports of certain hot rolled stainless steel sheets and coils originating in Indonesia, the People’s Republic of China and Taiwan, OJ EU 2020 L 110/3, recitals 362–364. 127 Cf. on this subject also Duramy (2018), pp. 511–518.

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of measures has for the Union industry. For example, arguments relating to the higher level of prices will often be rebutted by the Commission by establishing that imposing these measures would have a very limited impact on the cost structure of these market operators.128 Arguments pointing to the negative impact the imposition of measures would have on consumers’ interests are likewise dismissed by the Commission on a regular basis. Here, it is frequently argued that, unless the measures are imposed, the Union industry would disappear, leaving EU consumers with the dumped goods as their only source of supply. In this scenario, the exporting producers would be in a position to further increase their position on the market and increase prices to the detriment of consumers and end-users.129 In general, a low level of cooperation by users, importers or consumers’ representative organizations will be taken as indicative of the imposition of measures not having a negative impact on their interests.130 As indicated above, Article 21 (1) BADR further provides that, in assessing whether the Union’s interest calls for intervention, the need to eliminate the trade distorting effects of injurious dumping and to restore effective competition shall be given special consideration. A competition assessment carried out under the Union interest test will be concerned with the possible negative impact on competition the imposition on measures would have, and not with the detrimental effects the presence of dumped goods has on competition within the internal market.131 It should be noted, however, that the Commission has repeatedly stated that the protection of the Union industry against injurious dumping must be given priority over the interests of users to avoid potential negative effects on competition on the

128 Cf. e.g. Commission Implementing Regulation (EU) 2020/1428 of 12 October 2020 imposing a provisional anti-dumping duty on imports of aluminium extrusions originating in the People’s Republic of China, OJ EU 2020 L 336/8, recitals 326–327. For a detailed assessment of the impact the imposition of anti-dumping measures would have on users’ prices and profitability cf. Commission Implementing Regulation (EU) 2019/1688 of 8 October 2019 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of mixtures of urea and ammonium nitrate originating in Russia, Trinidad and Tobago and the United States of America, OJ EU 2019 L 258/21, recitals 241–264. 129 Cf. e.g. Commission Regulation (EU) No. 513/2013 of 4 June 2013 imposing a provisional antidumping duty on imports of crystalline silicon photovoltaic modules and key components (i.e. cells and wafers) originating in or consigned from the People’s Republic of China and amending Regulation (EU) No 182/2013 making these imports originating in or consigned from the People’s Republic of China subject to registration, OJ EU 2013 L 152/5, recital 253. It should be noted, however, that there is only limited evidence of exporting producers actually pursuing such a strategy of predatory dumping or of them being in a position of doing so successfully. 130 Cf. e.g. Commission Implementing Regulation (EU) 2019/1267 of 26 July 2019 imposing a definitive anti-dumping duty on imports of tungsten electrodes originating in the People’s Republic of China following an expiry review under Article 11(2) of Regulation (EU) 2016/1036, OJ EU 2019 L 200/4, para. 220. 131 European Commission, DG Trade Working Document: Draft Guidelines on Union Interest (2013), para. 8.

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internal market.132 Likewise, in examining competition-related arguments in its Union interest analysis, DG Trade will also emphasize that its Union interest test does not encompass a competition assessment in the strict legal sense. Such an assessment can only be carried out by a competent competition authority.133 Accordingly, the analysis of competition-related arguments during Union interest assessment is limited in scope. Examples of competition-related arguments brought forward include allegations that the EU industry was engaged in anti-competitive practices in the past.134 Another variation of this line of argumentation are claims that the imposition of anti-dumping measures would result in the creation or reinforcement of a dominant position enjoyed by the complainant Union industry.135 Such arguments are unlikely to be accepted by the Commission, not least due to its superficial analysis of competition concerns.136 The extent to which non-economic concerns such as environmental protection or development policy aspects can be included in the Union interest assessment is disputed. In the past, the Commission has rebutted arguments relating to their inclusion.137 Indeed, in the 2009 Biodiesel proceedings, the Commission held that Article 21 of the basic Regulation requires that special consideration shall be given to the need to eliminate trade distorting effects of injurious dumping and to restore effective competition. Against this background, general considerations on environmental protection (. . .) cannot be taken into account in the analysis and at the same time cannot justify unfair trade practices.138

132

Commission Implementing Regulation (EU) 2016/388 of 17 March 2016 imposing a definitive anti-dumping duty on imports of tubes and pipes of ductile cast iron (also known as spheroidal graphite cast iron) originating in India, OJ EU 2019 L 73/53, recital 149. 133 Commission Implementing Regulation (EU) 2016/388 of 17 March 2016 imposing a definitive anti-dumping duty on imports of tubes and pipes of ductile cast iron (also known as spheroidal graphite cast iron) originating in India, OJ EU 2019 L 73/53, recitals 145, 149. 134 Commission Regulation (EC) No 1009/2004 of 19 May 2004 imposing a provisional antidumping duty on imports of certain graphite electrode systems originating in India, OJ EC L 163/81, recital 105. 135 Commission Implementing Regulation (EU) 2021/546 of 29 March 2021 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of aluminium extrusions originating in the People’s Republic of China, OJ EU 2021 L 109/1, recital 323; Commission Implementing Regulation (EU) 2021/9 of 6 January 2021 imposing a provisional antidumping duty on imports of certain hot-rolled flat products of iron, non-alloy or other alloy steel originating in Turkey, OJ EU 2021 L 3/4, recitals 199 et seq; Commission Implementing Regulation (EU) 2020/1428 of 12 October 2020 imposing a provisional anti-dumping duty on imports of aluminium extrusions originating in the People’s Republic of China, OJ EU 2020 L 336/8, recital 316. 136 On this issue cf. also Trapp (2022), p. 230 et seq. 137 Cf. e.g. Council Regulation (EC) No. 1472/2006 of 5 October 2006 imposing a definitive antidumping duty and collecting definitively the provisional duty imposed on imports of certain footwear with uppers of leather originating in the People’s Republic of China and Vietnam, OJ EC 2006 L 275/1, recital 281. 138 Commission Regulation (EC) No. 193/2009 of 11 March 2009 imposing a provisional antidumping duty on imports of biodiesel originating in the United States of America, OJ EC 2009 L 67/22, recital 158.

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However, more recent Commission practice suggests that its stance on the matter has evolved somewhat, with it referencing arguments relating to matters of environmental protection within the Union interest analysis on a regular basis ever since the Solar Panels proceedings of 2013.139 This is in line with the general spirit of the modifications introduced by Regulation (EU) 2017/2321 and Regulation (EU) 2018/ 825, which allow for aspects relating to environmental protection of the protection of workers’ rights can be taken into consideration at multiple stages of an anti-dumping investigation. It should be noted, however, that the Commission is yet to adopt a coherent approach in examining environmental policy-related arguments during its Union interest assessment: while the Commission has in some investigations dedicated an entire sub-section named “environmental aspects” to an analysis of the effects the (non-)imposition of anti-dumping measures would have on the EU’s internal environmental policy objectives,140 in other investigations, it has addressed environmental policy-related arguments as part of its assessment of the interests of the Union industry,141 users142 or consumers.143 139

Cf. e.g. Commission Regulation (EU) No. 513/2013 of 4 June 2013 imposing a provisional antidumping duty on imports of crystalline silicon photovoltaic modules and key components (i.e. cells and wafers) originating in or consigned from the People’s Republic of China and amending Regulation (EU) No 182/2013 making these imports originating in or consigned from the People’s Republic of China subject to registration, OJ EU 2013 L 152/5, recitals 247 et seq.; Commission Implementing Regulation (EU) 2018/1012 of 17 July 2018 imposing a provisional anti-dumping duty on imports of electric bicycles originating in the People’s Republic of China and amending Implementing Regulation (EU) 2018/671, OJ EU 2018 L 181/7, recital 252; Commission Implementing Regulation (EU) 2020/1080 of 22 July 2020 imposing a definitive anti-dumping duty on imports of solar glass originating in the People’s Republic of China following an expiry review pursuant to Article 11 (2) of Regulation (EU) 2016/1036 of the European Parliament and of the Council, OJ EU 2020 L 238/1, recitals 242 et seq. 140 Commission Implementing Regulation (EU) 2020/1080 of 22 July 2020 imposing a definitive anti-dumping duty on imports of solar glass originating in the People’s Republic of China following an expiry review pursuant to Article 11 (2) of Regulation (EU) 2016/1036 of the European Parliament and of the Council, OJ EU 2020 L 238/1, recital 242 et seq. 141 Cf. e.g. Commission Implementing Regulation (EU) 2021/546 of 29 March 2021 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of aluminium extrusions originating in the People’s Republic of China, OJ EU 2021 L 109/1, recital 314. 142 Commission Implementing Regulation (EU) 2020/776 of 12 June 2020 imposing definitive countervailing duties on imports of certain woven and/or stitched glass fibre fabrics originating in the People’s Republic of China and Egypt and amending Commission Implementing Regulation (EU) 2020/492 imposing definitive anti-dumping duties on imports of certain woven and/or stitched glass fibre fabrics originating in the People’s Republic of China and Egypt, OJ EU 2020 L 189/1, recitals 503–507. While this concerned countervailing proceedings, due to the structural similarities between the BADR and the BASR also as regards the Union interest assessment, the findings can be transferred to proceedings under the BADR. Cf. further Commission Implementing Regulation (EU) 2021/546 of 29 March 2021 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of aluminium extrusions originating in the People’s Republic of China, OJ EU 2021 L 109/1, recitals 344, 351. 143 Cf. e.g. Commission Implementing Regulation (EU) 2018/1012 of 17 July 2018 imposing a provisional anti-dumping duty on imports of electric bicycles originating in the People’s Republic of China and amending Implementing Regulation (EU) 2018/671, OJ EU 2018 L 113/4, recital 252.

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Yet, the inclusion of environmental policy concerns has not brought about a fundamental shift in the Commission’s Union interest analysis: at its core, the Union interest test remains a balancing exercise used to weigh primarily economic interests against each other. Non-economic concerns have so far failed to develop any relevance on their own. Instead, under the Commission’s current practice, they are frequently only used to further reinforce the Commission’s conclusions as regards the outcome of the weighing and balancing of competing interests carried out under Article 21 BADR.144 Regulation (EU) 2018/825 introduced a number of changes to the BADR and the BASR. Among these was the introduction of a second Union interest test to be carried out in anti-dumping investigations by the Commission under certain circumstances: Article 7 (2b) BADR provides that once it has been established that so-called “raw material distortions” with regard to the product concerned exist, the Commission may impose anti-dumping duties up to the full margin of dumping instead of limiting them to the amount necessary to offset the injury sustained by the Union industry145 if it can clearly demonstrate that it is in the Union’s interest to do so. Accordingly, where the Commission’s investigation has revealed the existence of significant distortions, it now has to carry out two Union interest tests: one under Article 21 BADR, deciding whether the imposition of measures would serve the Union’s interest, and a second one under Article 7 (2b) BADR, deciding which level of measures would be in the Union’s interest.146 It should be noted that, opposite to the formulation employed in Article 21 (1) BADR, the “new” Union interest test is a positive one: it needs to be positively established that the imposition of measures up to the full dumping margin would serve the Union interest. If it can not be determined that this is the case, the level of measures is limited to the injury margin.147 In carrying out this assessment, the Commission shall actively seek information from interested parties enabling it to determine whether the level of duties should be limited to the injury margin or not.148 During this procedure, all EU producers shall be heard.149 Consequently, the relevance given to the interests of the various economic operators varies from the

144

On the integration of environmental policy concerns during the Union interest assessment cf. Trapp (2022), p. 237 et seq. 145 Limiting the level of measures to the amount necessary to offset the injury sustained by the Union industry is commonly referred to as the “lesser duty rule”. Cf. in detail on the lesser duty rule p. 53 et seq. 146 In detail on the modifications to the level of measures imposed under the BADR cf. below p. 53 et seq. 147 Hoffmeister (2020), pp. 211, 222. 148 Article 7 (2b) second sentence BADR. 149 Cf. recital 22 of Regulation (EU) 2018/825 of the European Parliament and of the Council of 30 May 2018 amending Regulation (EU) 2016/1036 on protection against dumped imports from countries not members of the European Union and Regulation (EU) 2016/1037 on protection against subsidised imports from countries not members of the European Union, OJ EU 2018 L 143/1.

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regular Union interest analysis to be carried out under Article 21 BADR: the emphasis on the interests of the Union industry is not as pronounced; instead, the interests of users are given more room.150 Indeed, the Union interest test included in Article 7 (2b) BADR is intended to ensure that in particular the users of the product concerned are not disproportionately affected by a higher level of duties, as is also evident from the Commission’s practice under the reformed basic regulation.151 In order to prevent the level of measures to be set at the full dumping margin, users need to actively come forward and provide the Commission with information on the negative effects a higher level of duties would entail. In the absence of cooperation, the Commission may conclude that the interests of users would not be hurt disproportionately, and levy measures up to the dumping margin.152

2.3.2.2

The Course of Anti-dumping Proceedings

Usually, an anti-dumping proceeding will be initiated upon a complaint by the injured industry submitted to the Commission as the investigating authority. In theory, Article 5 (6) BADR also provides for the ex officio initiation of proceedings in special circumstances.153 This shall be done on the basis of sufficient evidence of dumping, injury and a causal link to justify such initiation. Since the overhaul of the EU’s trade defence instruments by Regulation (EU) 2018/825, the “special circumstances” mentioned in Article 5 (6) BADR explicitly include the threat of retaliation by third countries.154 Where an investigation is not initiated by a complaint, the Commission requests the Union producers to cooperate with the Commission, particularly by providing the information necessary for the investigation to proceed. However, there is no obligation on part of the Union producers to do so.155 An investigation into alleged dumping practices shall be initiated upon a written complaint by any natural or legal person, or any association not having legal personality, acting on behalf of the Union industry.156 Another novelty introduced by Regulation (EU) 2018/825 is that complaints now may also be submitted jointly by the Union industry, or by any natural or legal person or any association not having legal

150

Trapp (2022), p. 244. Cf. Commission Implementing Regulation (EU) 2020/508 of 7 April 2020 imposing a provisional anti-dumping duty on imports of certain hot rolled stainless steel sheets and coils originating in Indonesia, the People’s Republic of China and Taiwan, OJ 2020 L 110/3, recitals 368–377: here, the Commission found that the possible impact of a higher level of measures would be disproportionate in view of the possible strong negative effects on supply chains for certain Union companies and on users. 152 Article 7 (2b) fourth sentence BADR. 153 On the provision cf. Rados, in: Krenzler/Herrmann/Niestedt (eds.), EU-Außenwirtschafts- und Zollrecht, 2020, Art. 5 AD-GVO, para. 21. 154 Cf. recital 6 of Regulation (EU) 2018/825. 155 Recital 7 of Regulation (EU) 2018/825 and Article 6 (10) of Regulation (EU) 2016/1036. 156 Article 5 (1) BADR. 151

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personality acting on behalf thereof, and trade unions, or be supported by trade unions. However, an investigation will not be initiated where the complaint is not considered as having been made “on behalf” of the Union industry. This is the case where the collective output of the like product of the complaints constitutes more than 50% of the total production of the like product produced by that portion of the EU industry expressing either support for or opposition to the complaint.157 The majority of trade defence investigations initiated within the EU concern a limited number of industry sectors, such as the steel and the chemical industry.158 Hence, these sectors may be described as “established” users of trade defence instruments, with their respective representative organizations being familiar both with their rights under EU trade defence law and the course of trade defence proceedings. This may not necessarily be the case for other industry sectors, in particular where a sector is fragmented and/or largely consists of small and medium enterprises (SMEs). The EU institutions aim at raising awareness among these non-traditional users of trade defence instruments, and at facilitating access to the trade defence instruments. To facilitate this aim, the newly introduced Article 5 (1a) BADR now includes specific measures intended to remove barriers to SMEs’ access to trade defence instruments. This is to be achieved inter alia through a dedicated SME Helpdesk, raising awareness and providing general information and explanations on procedures and on how to submit a complaint. So far, the success of this initiative remains limited. While the Commission has initiated one anti-dumping investigation in an industry comprised largely of SMEs,159 the investigation was later terminated following the withdrawal of the complaint.160 The still on-going discussion regarding the perceived lack of transparency of the EU’s trade policy, instigated in particular by the negotiations concerning the conclusion of free trade agreements (FTAs) with Canada (CETA) and the USA (TTIP), resulted in the publication of the “Trade for all” strategy by the Commission in October 2015.161 Herein, the Commission inter alia set out to increase transparency in the application of its trade defence instruments.162 Accordingly, the Commission 157

Article 5(4) BADR. European Court of Auditors, Special Report: Trade defence instruments: system for protecting EU businesses from dumped and subsidised imports functions well (2020), p. 20 et seq., available at https://www.eca.europa.eu/Lists/ECADocuments/SR20_17/SR_trade_defence_instruments_EN. pdf. 159 European Commission, Notice of initiation of an anti-dumping proceeding concerning imports of pins and staples originating in the People’s Republic of China, 18 December 2019, OJ EU 2019 C 425/8. 160 Commission Implementing Decision (EU) 2020/1202 of 14 August 2020 terminating the antidumping proceeding concerning imports of pins and staples originating in the People’s Republic of China and subjecting imports of pins and staples originating in the People’s Republic of China to surveillance, OJ 2020 L 269/40. 161 European Commission, Trade for All – Towards a more responsible trade and investment policy (COM(2015) 497). 162 Indeed, calls by practitioners and legal scholars alike for an increase in transparency had become more frequent over the years preceding the adoption of the new trade strategy, cf. e.g. Antonini 158

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has been publishing executive summaries of all requests for the initiation of an anti-dumping or anti-subsidy proceeding as well as all requests for the initiation of a review procedure of measures already in place since May 2016.163 In line with this, the further increase in transparency in anti-dumping and anti-subsidy proceedings was among the declared objectives of Regulation (EU) 2018/825. This led to the insertion of Article 19a BADR, introducing a so-called “pre-disclosure period” of four weeks before the imposition of provisional duties. During that period, Union producers, importers and exporters and their representative associations, and representatives of the exporting country may be provided with information on the planned imposition of the provisional duties.164 Moreover, parties may correct factual errors made by the Commission prior to the adoption of provisional measures.165 Additionally, the office of the “Hearing Officer”, who is to ensure that the procedural rights of the parties involved are respected, is now explicitly mentioned in the basic regulation.166 Following consultations with the Member States, a simultaneous investigation of both the existence of dumping and injury takes place, covering a period of no less than six months prior to the initiation of the proceedings.167 The starting point of the investigation are consultations of the parties concerned by means of questionnaires.168 The Commission may further require the Member States to supply information,169 and to carry out all necessary checks and inspections, as well as to carry out investigations in third countries.170 Where appropriate, the Commission may also carry out visits to the premises of firms to examine the records of importers, exporters and other economic operators to verify information.171 Lastly, Article 17 BADR authorizes the Commission to limit the investigation to a reasonable number of parties, products or transactions where the number of Union producers, exporters or importers, types of products or transactions is large (so-called “sampling”). Transparency during this phase of the proceedings was greatly increased by

(2014), p. 334 et seq.; Gambardella (2011), p. 157 et seq.; Lux (2014), p. 397 et seq.; Melin (2016), p. 88 et seq.; Newman (2011), p. 49 et seq.; Rovetta and Gambardella (2014), p. 338 et seq.; Vermulst and Fjellner (2015), p. 149 et seq. 163 Cf. European Commission, The Commission increases transparency of its trade defence procedures, 19 May 2016, available at . 164 Commission Delegated Regulation (EU) 2020/1173 of 4 June 2020 amending Regulation (EU) 2016/1036 on protection against dumped imports from countries not members of the European Union and Regulation (EU) 2016/1037 on protection against subsidised imports from countries not members of the European Union as regards the duration of the period of pre-disclosure, OJ EU 2020 L 259/1. 165 Articles 7 (1) (b), 19a BADR. 166 Cf. inter alia Articles 6 (11), 23 (1) subpara. 2 BADR. 167 Article 6 (1) BADR. Cf. further Boysen (2020), para. 65. 168 Article 6 (2) BADR. 169 Article 6 (3) BADR. 170 Article 6 (4) BADR. 171 Article 16 BADR.

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the Commission’s “Trade for All” strategy.172 Since the end of 2016, the new online platform TRON (“Trade Online”) grants the parties to the proceedings uncomplicated access to all non-confidential information related to the proceedings, and simultaneously serves as a communication channel between the parties to the proceedings and the Commission. As a result of the introduction of the “pre-disclosure period”, the Commission is now also required to publish its intention to impose provisional measures on the internet platform.173 At the end of the investigation—the length of which may not exceed 14 months174—the Commission may impose anti-dumping measures or terminate the investigation without the imposition of measures. Usually, the Commission will impose provisional measures only after having consulted with the Member States. However, in urgent cases, the Commission may also do so after having informed the Member States in accordance with the procedure set out in Article 8 of the Comitology Regulation.175 The Member States may terminate these measures by a negative vote with qualified majority on the imposition of definitive measures in the Trade Defence Instruments Committee.

2.3.2.3 2.3.2.3.1

Anti-dumping Measures Types of Measures

Once it has been established that the substantive preconditions for the imposition of anti-dumping measures are fulfilled, measures can be imposed in the form of antidumping duties or undertakings. Usually, duties will be imposed as ad valorem duties, expressed on the CIF Union border price, customs duty unpaid.176 Another alternative is the imposition of a fixed duty per unit, weight or measure imported. Such an alternate form of duty will be imposed e.g. where the Union interest speaks against the imposition of ad valorem duties177 or where an ad valorem duty would be insufficient to eliminate

172

Cf. above fn. 160. Article 7 (1) subpara. 4 BADR. 174 Article 6 (9) BADR. 175 Articles 7 (4), 15 (4) BADR. 176 Cf. e.g. Commission Implementing Regulation (EU) 2021/983 of 17 June 2021 imposing a provisional anti-dumping duty on imports of aluminium converter foil originating in the People’s Republic of China, OJ EU 2021 L 216/142, recitals 387 et seq; Commission Implementing Regulation (EU) 2021/939 of 10 June 2021 imposing a provisional anti-dumping duty on imports of mono ethylene glycol originating in the United States of America and the Kingdom of Saudi Arabia, OJ EU 2021 L 205/4, recitals 314 et seq. 177 Cf. e.g. Commission Regulation (EU) 2018/683 of 4 May 2018 imposing a provisional antidumping duty on imports of certain pneumatic tyres, new or retreaded, of rubber, of a kind used for buses or lorries, with a load index exceeding 121 originating in the People’s Republic of China, and amending Implementing Regulation (EU) 2018/163, OJ EU 2018 L 116/8, recitals 269 et seq. 173

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injury.178 Other types of duties include the imposition of a variable duty expressed as the difference between the import price and a certain minimum or floor price,179 or a combination of different duty types.180 The Commission is free to choose, within the limits of its margin of discretion, on the type of duty to be imposed.181 In the vast majority of cases, measures will take the form of anti-dumping duties. While undertakings were employed regularly by the EU institutions in the past, their acceptance rate has declined sharply over the last decades. Between 2009 and 2019, the Commission only accepted undertaking offers in four anti-dumping investigations (out of more than 130 new investigations initiated during that time period).182 The Commission may accept undertaking offers by an exporter to revise its prices or to cease exports at dumped prices if the injurious effect of the dumping is thereby eliminated, Article 8 (1) BADR. The Commission enjoys wide discretion in deciding whether to accept or reject an undertaking offer.183 According to Article 8 (3) BADR, the Commission may reject offers if their acceptance is considered impractical, or for other reasons, including reasons of general policy. Since the entry into force of Regulation (EU) 2018/825, environmental policy concerns and concerns relating to the protection of workers’ rights in the exporting country are

178 Cf. e.g. Commission Implementing Regulation (EU) 2019/1688 of 8 October 2019 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of mixtures of urea and ammonium nitrate originating in Russia, Trinidad and Tobago and the United States of America, OJ EU 2019 L 258/21, recitals 274 et seq. 179 Cf. e.g. Council Regulation (EC) No. 407/2007 of 16 April 2007 imposing definitive antidumping measures and releasing the provisional duty imposed on imports of certain frozen strawberries originating in the People’s Republic of China, OJ EC 2007 L 100/1, recitals 87 et seq. 180 Cf. e.g. Commission Implementing Regulation (EU) 2017/1795 of 5 October 2017 imposing a definitive anti-dumping duty on imports of certain hot-rolled flat products of iron, non-alloy or other alloy steel originating in Brazil, Iran, Russia and Ukraine and terminating the investigation on imports of certain hot-rolled flat products of iron, non-alloy or other alloy steel originating in Serbia, OJ EU 2017 L 258/24, recitals 540 et seq, 625 et seq. 181 European Court of Justice, judgment of 28 February 2008, case C-263/06, ECLI:EU:C:2008: 128, Carboni e derivati Srl v Ministero dell’Economia e delle Finanze and Riunione Adriatica di Sicurtà SpA, para. 46. 182 Commission Implementing Decision (EU) 707/2013 of 4 December 2013 confirming the acceptance of an undertaking offered in connection with the anti-dumping and anti-subsidy proceedings concerning imports of crystalline silicon photovoltaic modules and key components (i.e. cells) originating in or consigned from the People’s Republic of China for the period of application of definitive measures, OJ EU 2013 L 325/214; Commission Decision (EU) 279/2011 of 13 May 2011 accepting an undertaking offered in connection with the anti-dumping proceeding concerning imports of zeolite A powder originating in Bosnia and Herzegovina, OJ EU 2011 L 125/26; Commission Decision (EU) 177/2010 of 23 March 2010 amending Decision 2006/109/EC by accepting three offers to join the joint price undertaking accepted in connection with the antidumping proceeding concerning imports of certain castings originating in the People’s Republic of China, OJ EU 2010 L 77/55; Commission Decision of 5 October 2009 accepting an undertaking offered in connection with the anti-dumping proceeding concerning imports of certain aluminium foil originating, inter alia, in Brazil (2009/736/EC), OJ EU 2009 L 262/50. 183 General Court, judgment of 8 July 2020, ECLI:EU:T:2020:315, Jiangsu Seraphim Solar System Co. Ltd v Commission, para. 75.

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explicitly named as such general policy concerns. In the majority of cases, offers are rejected due to concerns relating to difficulties relating to the monitoring and enforcement of the undertaking184 or its effectiveness in alleviating the injury to the Union industry.185 Where an undertaking is accepted, the provisional or definitive anti-dumping duties do not apply to the exporter(s) who are included in the Commission decision accepting the undertaking offer.186 The exporters may withdraw from the undertaking at any point in time. Further, the Commission may withdraw its acceptance of an undertaking where it considers the undertaking no longer appropriate187 or where it is found that the exporter has violated the commitments of the undertaking.188 In such cases, the acceptance of the undertaking will be withdrawn by Commission decision or, where appropriate, Commission regulation, and the provisional or definitive anti-dumping duty imposed by the Commission applies automatically.189 Lastly, it should be noted that proceedings may also be terminated without the imposition of measures. This may be so where a complaint is withdrawn,190 or where protective measures are considered to be unnecessary.191

2.3.2.3.2

Level of Measures

The amount of provisional and definitive anti-dumping duties is limited by the margin of dumping as established. It should however be less than the margin if such a lesser duty would be adequate to remove the injury to the Union industry.192

184

Commission Implementing Regulation (EU) 2021/546 of 29 March 2021 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of aluminium extrusions originating in the People’s Republic of China, OJ EU 2021 L 109/1, recital 173; Commission Implementing Regulation (EU) 2019/73 of 17 January 2019 imposing a definitive antidumping duty and definitively collecting the provisional duty imposed on imports of electric bicycles originating in the People’s Republic of China, OJ EU 2019 L 16/108, recitals 214 et seq. 185 Cf. e.g. Commission Implementing Regulation (EU) 2021/1100 of 5 July 2021 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of certain hot-rolled flat products of iron, non-alloy or other alloy steel originating in Turkey, OJ EU 2021 L 238/32, recitals 289 et seq; Commission Implementing Regulation (EU) 2021/546 of 29 March 2021 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of aluminium extrusions originating in the People’s Republic of China, OJ EU 2021 L 109/1, recital 171. 186 Article 8 (1) subpara. 2 BADR. 187 Cf. e.g. Council Regulation (EC) No. 1279/2007 of 30 October 2007 imposing a definitive antidumping duty on certain iron or steel ropes and cables originating in the Russian Federation, and repealing the anti-dumping measures on imports of certain iron or steel ropes and cables originating in Thailand and Turkey, OJ EC 2007 L 285/1, recitals 200–201. 188 Article 8 (9) BADR. 189 Article 8 (9) subpara. 1 BADR. 190 Article 9 (1) BADR may only be terminated where this does not run against the Union’s interest. 191 Article 9 (2) BADR. 192 Article 9 (4) subpara. 2 BADR and Article 7 (2) BADR.

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The same applies with regard to undertakings: price increases under undertakings shall not be higher than necessary to eliminate the margin of dumping, and they shall remain below that where such an increase would be adequate to remove the injury to the Union industry.193 Thus, the level of duty ultimately imposed corresponds to the dumping margin or the amount necessary to remove the injury sustained by the EU industry, whichever is the lower of the two margins.194 This so-called “lesser duty rule” is another “WTO plus”-feature of EU trade defence law:195 under WTO law, its application is left at the discretion of the importing members.196 Yet, under some of its bilateral trade agreements, the EU has undertaken an obligation to use the rule when investigating imports from the respective trading partner. By limiting the level of measures to the amount necessary to alleviate the injury to the Union industry, the lesser duty rule serves to balance the interests of exporting producers, importers and consumers of the EU. In respect of EU trade defence measures, it is an expression of the general principle of proportionality.197 It should be noted, however, that the scope of application of the lesser duty rule in anti-dumping proceedings as well as anti-subsidy proceedings was limited significantly by Regulation (EU) 2018/825. Now, the lesser duty rule will not be applicable in anti-dumping proceedings where – raw material distortions within the sense of Article 7 (2a) BADR are found to exist; – the raw material for which a distortion is found does not account for less than 17% of the cost of production of the product concerned; and – the Commission can clearly conclude that it would be in the Union’s interest to base the amount of duty not on the injury but the dumping margin.198 The provisions governing the price increases under undertakings were adapted accordingly.199 These limitations to the scope of application of the lesser duty rule were deemed necessary as third countries increasingly interfere in the trade of raw materials, thereby creating additional distortions of trade. This active involvement of third country governments, helping their own industry to outcompete the EU

193

Article 8 (1) subpara. 3 BADR. Mueller et al. (2009) para. 14.03. 195 Wessels and Larik (2020), p. 223. 196 Panel Report of 28 October 2011, WT/DS405/R, European Union – Anti-Dumping Measures on Certain Footwear from China, para. 7.924; Panel Report of 28 June 2002, WT/DS206/R, United States – Anti-Dumping and Countervailing Measures on Steel Plate from India, para. 7.116. 197 General Court, judgment of 28 February 2017, case T-162/14, ECLI:EU:T:2017:124, Canadian Solar Emea GmbH and others v Council, para. 190, upheld on appeal by the European Court of Justice in C-236/17 P, ECLI:EU:T:2017:124, para. 168. 198 Article 7 (2a), (2b) BADR. This also applies to definitive anti-dumping measures, cf. Article 9 (4) BADR. 199 Article 8 (1) subpara. 4. 194

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industry, is said to warrant a “more principled reaction”, i.e. the imposition of duties up to the full margin of dumping.200 So far, the provisions on the non-application of the lesser duty rule in the event of raw material distortions have only been applied in a limited number of anti-dumping proceedings. In only one proceeding has the application of Article 7 (2a), (2b) BADR resulted in duties being imposed up to the dumping margin.201 In another case, the Commission refrained from making use of this option. It found that if duties were to be imposed pursuant to Article 7 (2a) BADR, the potential impact of measures would be disproportionate in view of the possible strong negative effects on supply chains for certain Union companies and on users. Under such a scenario, the user industry might be unduly affected and as a result could become loss making.202 In other proceedings, the raw material for which a distortion was found to exist did not surpass the 17%-threshold set out in Article 7 (2a) BADR.203 Overall, the impact of the new rules on the (non-)application of the lesser duty rule in anti-dumping proceedings must thus be described as marginal. Where the lesser duty rule still applies, the EU institutions must determine the level of duty that would be adequate to remove the injury to the Union industry.204 For this purpose, the so-called “injury margin” must be calculated. The BADR does not set out a methodology to be employed in this regard. In practice, the Commission will have recourse to the “price undercutting” or the “price underselling” method. At its core, the “price undercutting” methodology is a comparison between the prices charged by the exporting producers for dumped goods sold within the EU and those charged by the EU industry producing like products.205 Where the Commission finds that it is not appropriate to compare the actual prices charged as the prices of the EU industry have been depressed as a result of the presence of dumped imports on the internal market, it will resort to the application of the so-called “price underselling”

200 Recital 8 of Regulation (EU) 2018/825 of the European Parliament and of the Council of 30 May 2018 amending Regulation (EU) 2016/1036 on protection against dumped imports from countries not members of the European Union and Regulation (EU) 2016/1037 on protection against subsidised imports from countries not members of the European Union, OJ EU 2018 L 143/1; Hoffmeister (2015), pp. 365, 370. 201 Commission Implementing Regulation (EU) 2019/576 of 10 April 2019 imposing a provisional anti-dumping duty on imports of mixtures of urea and ammonium nitrate originating in Russia, Trinidad and Tobago and the United States of America, OJ EU 2019 L 100/7, recitals 210 et seq. 202 Commission Implementing Regulation (EU) 2020/508 of 7 April 2020 imposing a provisional anti-dumping duty on imports of certain hot rolled stainless steel sheets and coils originating in Indonesia, the People’s Republic of China and Taiwan, OJ EU 2020 L 110/3, recitals 368–377. 203 Commission Implementing Regulation (EU) 2021/983 of 17 June 2021 imposing a provisional anti-dumping duty on imports of aluminium converter foil originating in the People’s Republic of China, OJ EU 2021 L 216/142, recitals 379 et seq; Commission Implementing Regulation (EU) 2021/582 of 9 April 2021 imposing a provisional anti-dumping duty on imports of aluminium flat-rolled products originating in the People’s Republic of China, OJ EU 2021 L 124/40, recitals 476 et seq. 204 Luo (2010), p. 131. 205 In detail cf. van Bael and Bellis (2019), § 4.11 [A] [2].

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methodology in establishing the injury margin. In these instances, the exporting producers’ prices will be compared with a “target price”. The target price represents the price which the Union industry would be able to achieve absent the competitive pressure exerted by the dumped products.206 Pursuant to Article 7 (2c) BADR as introduced by Regulation (EU) 2018/825, where the injury margin is calculated on the basis of a target price, the target profit used shall be established taking into account factors such as the level of profitability before the increase of imports from the country under investigation, the level of profitability needed to cover full costs and investments, research and development (R&D) and innovation, and the level of profitability to be expected under normal conditions of competition. Such profit margin shall not be lower than 6% (de minimis). Under the practice of the Commission in applying Article 7 (2c) BADR, the target price will not only be reflective the actual expenditures of the EU industry for the above-mentioned purposes. Instead, in some instances, the Commission calculated the target price based on the hypothetical level of expenditure the Union industry would have incurred under normal conditions of competition.207 The compatibility of this provision of the BADR with the jurisprudence of the General Court appears doubtful: the Court has repeatedly held that the profit margin must be limited to the profit margin which the Union industry could reasonably count on achieving under normal conditions of competition, in the absence of dumped imports. It would not be consistent with the basic regulations to allow the Union industry a profit margin that it could not have expected to achieve even if there were no dumped products with which it competes.208 However, it appears that the new rules on the target profit do not conform to this standard, as the de minimis profit margin is applied regardless of whether the Union industry ever achieved this level of profitability in the past.209 Moreover, when establishing the target price, present and future costs incurred by the Union industry resulting from compliance with standards contained in international environmental law or certain conventions of the International Labour Organisation (ILO) shall also be reflected as per Article 7 (2d) BADR. In practice, this has In detail cf. van Bael and Bellis (2019), § 7.04 [A] [2]. Commission Implementing Regulation (EU) 2022/1221 of 14 July 2022 imposing a provisional anti-dumping duty on imports of certain aluminium road wheels originating in Morocco, OJ EU 2022 L 188/114, recitals 159 et seq. 208 General Court, judgment of 17 December 1997, case T-121/95, ECLI:EU:T:1997:198, European Fertilizer Manufacturers’ Association (EFMA) v Council, para. 60; confirmed inter alia in judgment of the General Court of 11 September 2014, case T-443/11, ECLI:EU:T:2014: 774, Gold East Paper (Jiangsu) Co. Ltd. and others v Council, para. 245. 209 Cf. e.g. Commission Implementing Regulation (EU) 2022/547 of 5 April 2022 imposing a definitive anti-dumping duty on imports of superabsorbent polymers originating in the Republic of Korea, OJ EU 2022 L 107/27, recitals 379 et seq., where the profit margin was set at 6% even though large parts of the Union industry had been loss making over the entire period considered; or Commission Implementing Regulation (EU) 2021/983 of 17 June 2021 imposing a provisional antidumping duty on imports of aluminium converter foil originating in the People’s Republic of China, OJ EU 2021 L 216/142, recitals 367–371. 206 207

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proven particularly relevant for costs incurred by the Union industry as a result of the EU’s Emissions Trading Scheme (ETS).210 Accordingly, even where the lesser duty rule is still applicable, the reformed rules on the calculation of the target price result in the level of measures to increase, and the Union industry being awarded a higher degree of protection than it would have been the case before the amendments introduced by Regulation (EU) 2018/825 entered into force.

2.3.2.3.3

Temporal Aspects

Anti-dumping duties apply to all future imports of the product concerned at the rate set in the respective regulation imposing such duties as long as the regulation is not amended or repealed.211 As a general rule, provisional and definitive anti-dumping measures can only be applied to products which enter into free circulation after the entry into force of the regulation imposing the duties.212 Under certain circumstances, anti-dumping duties may be imposed retroactively for a period of no more than 90 days prior to the date of application of provisional measures.213 In case of breach or withdrawal of undertakings, definitive duties may be levied retroactively on goods for a maximum period of 90 days prior to the date of application of provisional measures, provided that the imports were registered. Any such retroactive application of measures may not apply to imports released into free circulation before the breach of the undertaking.214 In practice, the Commission has sought to circumvent these temporal limitations to the retroactive application of anti-dumping duties: following a finding that the commitments of an undertaking had been violated, the Commission has resorted to retroactively declaring the undertaking invoices presented upon importation by the exporters invalid.

210 Cf. e.g. Commission Implementing Regulation (EU) 2022/1395 of 11 August 2022 imposing a definitive anti-dumping duty on imports of certain corrosion resistant steels originating in Russia and Turkey, OJ EU 2022 L 211/127, recitals 325 et seq.; Commission Implementing Regulation (EU) 2021/983 of 17 June 2021 imposing a provisional anti-dumping duty on imports of aluminium converter foil originating in the People’s Republic of China, OJ EU 2021 L 216/142, recitals 372–374; Commission Implementing Regulation (EU) 2021/939 of 10 June 2021 imposing a provisional anti-dumping duty on imports of mono ethylene glycol originating in the United States of America and the Kingdom of Saudi Arabia, OJ EU 2021 L 205/4, recitals 263 et seq. On the amendments introduced by Regulation (EU) 2018/825 concerning the calculation of the injury margin cf. Trapp (2022), p. 207 et seq. 211 Van Bael and Bellis (2019), § 7.02. 212 Article 10 (1) BADR. Accordingly, goods that are brought into the EU under the so-called inward processing regime are not subjected to anti-dumping duties. Yet, as they may nonetheless be of relevance for the dumping analysis carried out by the Commission, the Commission takes them into consideration in said analysis. On the Commission’s practice cf. Willems et al. (2022), p. 233 et seq. 213 For details cf. Article 10 (4) BADR. 214 Article 10 (5) BADR.

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This, in turn, resulted in the retroactive incurrence of an anti-dumping duty debt.215 This practice was declared incompatible by the General Court, as it goes beyond the situations in which a duty may be levied retroactively as set out in the BADR. However, as the case is currently under appeal before the Court of Justice, with the Advocate General defending the retroactive incurrence of the anti-dumping debt.216 Anti-dumping measures—undertakings as well as duties—may only remain in force as long and to the extent that it is necessary to counteract the injurious dumping.217 A definitive measure shall expire after five years; however, its duration may be extended where a review finds that the expiry would be likely to lead to a continuation or recurrence of dumping and injury.218 Moreover, interim reviews may be initiated. An interim review may lead to the type219 or the level of measures being changed220 or the measures being repealed221 altogether. Where an interim

215 Cf. e.g. Commission Implementing Regulation (EU) 2016/1402 of 22 August 2016 withdrawing the acceptance of the undertaking for three exporting producers under Implementing Decision 2013/ 707/EU confirming the acceptance of an undertaking offered in connection with the anti-dumping and anti-subsidy proceedings concerning imports of crystalline silicon photovoltaic modules and key components (i.e. cells) originating in or consigned from the People’s Republic of China for the period of application of definitive measures, OJ EU 2016 L 228/16, recital 33. 216 General Court, judgment of 8 July 2020, case T-110/17, ECLI:EU:T:2020:315, Jiangsu Seraphim Solar System Co. Ltd v Commission, paras. 132, 137–138. Judgment currently under appeal before the Court of Justice in C-439/20 P. 217 Article 11 (1) BADR. 218 Article 11 (2) BADR. 219 Cf. e.g. Commission Implementing Regulation (EU) 2017/1570 of 15 September 2017 amending Implementing Regulation (EU) 2017/366 and Implementing Regulation (EU) 2017/ 367 imposing definitive countervailing and anti-dumping duties on imports of crystalline silicon photovoltaic modules and key components (i.e. cells) originating in or consigned from the People’s Republic of China and repealing Implementing Decision 2013/707/EU confirming the acceptance of an undertaking offered in connection with the anti-dumping and anti-subsidy proceedings concerning imports of crystalline silicon photovoltaic modules and key components (i.e. cells) originating in or consigned from the People’s Republic of China for the period of application of definitive measures, OJ EU 2017 L 238/22. For anti-subsidy proceedings cf. e.g. Commission Implementing Regulation (EU) 2020/738 of 2 June 2020 amending Implementing Regulation (EU) 2019/1268 imposing a definitive countervailing duty on imports of certain polyethylene terephthalate (PET) originating in India, OJ EU 2020 L 175/1, recitals 67 et seq. 220 Commission Implementing Regulation (EU) 2020/1165 of 6 August 2020 amending Implementing Regulation (EU) 2020/353 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of steel road wheels originating in the People’s Republic of China, OJ EU 2020 L 258/9. For anti-subsidy proceedings cf. Commission Implementing Regulation (EU) 2020/658 of 15 May 2020 amending Implementing Regulation (EU) 2015/309 imposing a definitive countervailing duty and collecting definitively the provisional duty on imports of certain rainbow trout originating in Turkey following an interim review pursuant to Article 19(4) of Regulation (EU) 2016/1037 of the European Parliament and of the Council, OJ EU 2020 L 155/3. 221 The instances where this is the case are extremely rare. The last interim reviews to result in the repeal of measures were concluded in 2013, Council Implementing Regulation (EU) No. 695/2013 of 15 July 2013 imposing a definitive anti-dumping duty on imports of ironing boards originating in

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review results in the duty being repealed, duties collected from the date of the initiation of the review investigation will be refunded retroactively.222

2.3.2.3.4

Procedural Aspects

Provisional and definitive anti-dumping duties are imposed by regulation as per Article 14 (1) BADR. They are applied on a Union-wide basis.223 It should be noted that, pursuant to the new provision of Article 14a BADR, anti-dumping duties may now also be imposed on products brought (a) to the continental shelf of a Member State or (b) the exclusive economic zone of a Member State, provided that the product subject to measures is used in any of the two places with the purpose of exploring or exploiting of the non-living natural resources of the seabed and its subsoil or in order to produce energy from the water, currents and winds, and provided that the product subject to measures is consumed there in significant quantities.224 Provisional anti-dumping duties may be imposed in accordance with the requirements set out in Article 7 BADR. The procedure to be adhered to in adopting the regulation imposing provisional duties is set out in Article 8 Comitology Regulation in conjunction with Article 4 thereof.225 The provisional anti-dumping duties will be adopted after the Commission has consulted, or, in cases of extreme urgency, after informing the Member States. As the advisory procedure applies, the Trade Defence Committee may deliver its opinion on the proposed measures, if necessary by taking a vote. The Commission is not bound by the opinion of the Trade Defence Committee. Definitive anti-dumping measures are imposed following the procedure set out in Article 5 Comitology Regulation.226,227 A definitive anti-dumping duty is adopted in accordance with the Commission’s proposal where the Trade Defence Instruments Committee votes in favour of the imposition of the measures by qualified majority, Article 5 (2) Comitology Regulation.228 Should the Committee reject the proposal, it will not be adopted, Article 5 (3) Comitology Regulation. Where the Committee

the People’s Republic of China, and repealing the anti-dumping measures on imports of ironing boards originating in Ukraine following an expiry review pursuant to Article 11(2) and a partial interim review pursuant to Article 11(3) of Regulation (EC) No 1225/2009, OJ EU 2013 L 198/1. In a more recent development, the Commission decided to suspend anti-dumping measures on imports of certain aluminium flat-rolled products originating in China, Commission Implementing Decision (EU) 2021/1788 of 8 October 2021, OJ EU 2021 L 359/10. On this cf. Kim (2022), p. 212 et seq. 222 Article 11 (5) BADR. 223 Van Bael and Bellis (2019), § 7.05. 224 Article 14a BADR and recital 24 of Regulation (EU) 2018/825. 225 Article 7 (4) BADR in conjunction with Article 15 (4) BADR. 226 Regulation (EU) No. 182/2011 (Chap. 1, fn. 67). 227 Article 9 (4) in conjunction with Article 15 (3) BADR. 228 A qualified majority requires 55% of all Member States accounting for at least 65% of the EU’s population to vote in favour, cf. Article 16 (4) in conjunction with Article 238 (3) TFEU.

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does not deliver an opinion—i.e. where neither a qualified majority for or against the adoption of measures can be attained—and the proposal is not rejected by simple majority, the Commission may nonetheless adopt the measures, except in the situations listed in Article 5 (4) subpara. 2 of the Comitology Regulation. If the Commission refrains from adopting the original proposal, an amended proposal may be submitted to the Committee. With regard to the imposition of definitive anti-dumping duties, however, Article 5 (2) subpara. 2 BADR stipulates that in the absence of an opinion by the Trade Defence Instruments Committee and a simultaneous rejection by simple majority, the Commission shall first enter into consultations with the Member States. Subsequently, the Commission submits its proposal— either the original or an amended one—to the Appeals Committee, which then issues its opinion. If the opinion is positive, the Commission adopts the measure; where the Appeals Committee votes against the adoption by qualified majority, it may not do so.229 However, it may still adopt the measure where there is no qualified majority in favour, but also no qualified majority against the adoption of the measure.230

2.3.3

Anti-subsidy Law

The basic anti-subsidy regulation (BASR) is frequently described as the “sister regulation” to the basic anti-dumping regulation. This can be explained by taking into account that, until 1994, the imposition of anti-dumping measures and antisubsidy measures was governed by the same regulation.231 To date, the BADR and the BASR still feature a number of commonalities: In particular, the provisions regarding the determination of injury (Articles 8 et seq. BASR), the course of the investigation (Articles 10 et seq. BASR) and the possible measures to be taken (Articles 12 et seq. BASR)232 are almost identical to the rules contained in the BADR.233 Accordingly, reference can be made to the corresponding sections above. However, while the BADR requires the importation of dumped products in order for measures to be taken, the BASR is intended to tackle the issue of injurious subsidisation to companies granted by third States, enabling the companies in question to offer the exported products at lower prices.234 Determining whether a 229

Article 6 (3) subpara. 3 BADR. Article 6 (3) subparas. 1 and 2 BADR. 231 Council Regulation (EEC) No. 2423/88 of 11 July 1988 on protection against dumped or subsidized imports from countries not members of the European Economic Community, OJ EC 1988 L 209/1. 232 It should be noted, however, that provisional anti-subsidy measures may only be imposed for a maximum period of four months, Article 12 (5) BASR. In anti-dumping cases, provisional duties may be imposed for six months and extended for a further three months or they may be imposed for nine months, Article 7 (6) BADR. On this subject cf. Lukas (2000), pp. 203–207, 204. 233 Snyder (1998), p. 212. 234 Boysen (2020), para. 69. 230

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foreign company has received subsidies, and if so, to what amount, thus lays at the focus of investigations carried out under the BASR.

2.3.3.1

Substantive Preconditions

The definition of what constitutes a subsidy within the meaning of the basic antidumping regulation235 is found in Article 3 BASR, according to which a subsidy shall be deemed to exist if there is a financial contribution by a government in the country of origin or export by means of transfer of funds, government revenue foregone or one of the other means listed in Article 3 (1) (a), (b) BASR, and a benefit is thereby conferred. In order to trigger the application of the BASR, however, the subsidies granted must constitute so-called “countervailable” or “specific” subsidies within the meaning of Article 4 BASR. This requires for the subsidy to exhibit characteristics going beyond mere financial support. A subsidy will be regarded as specific where the public authority granting the subsidy limits access to the subsidy to a certain enterprise (Article 4 (2) (a) BASR), where only enterprises located in a precisely defined geographical area are eligible for the subsidy (Article 4 (3), first sentence BASR), where the subsidies are conditional on the achievement of a certain export performance (genuine export subsidies) (Article 4 (4) (a) BASR) or where the granting of subsidies is contingent upon the use of domestic over imported goods (local content rules or import substitution subsidies) (Article 4 (4) (b) BASR). Annex I of the BASR provides a list of examples concerning practices by third States which will be considered as constituting de jure specific export subsidies. On the other hand, the setting or changing of generally applicable tax rates by all levels of government entitled to do so shall not be deemed to be a specific subsidy for the purposes of the BASR.236 This also applies in instances where the granting authority, or the legislation pursuant to which the granting authority operates, establishes objective criteria or conditions governing the eligibility for, and the amount of, a subsidy, provided that the eligibility is automatic and that such criteria and conditions are strictly adhered to.237 Finally, where doubts as to the specificity of the subsidy resulting from the application of Article 4 (1) (a) and (b) remain, other factors may be taken into consideration. These include inter alia the predominant use of the subsidy by certain enterprises or the granting of disproportionately large amounts of subsidy to certain enterprises (de facto specificity).238 In any event, Article 4 (5) BASR clarifies that any determination of specificity under the

The notion of “subsidy” is not identical to the notion of “State aid” used in EU State aid law, but instead aligns with the definition provided in WTO law, cf. Trapp (2021), pp. 964–971, 968; Herrmann (2004), pp. 415–445, 424 et seq. 236 Article 4 (3), second sentence BASR. 237 Article 4 (2) (b) BASR. 238 Article 4 (2) (c) BASR. 235

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provisions of this Article shall be clearly substantiated on the basis of positive evidence.239 The amount of countervailable subsidies shall be based on the benefit conferred to the recipient. The reference period in calculating the amount of subsidisation usually corresponds to the most recent accounting year of the beneficiary, but reference may also be made to any other period of at least six months prior to the initiation of the investigation, provided that reliable financial and other relevant data are available.240 As a rule, the countervailable subsidies shall be determined per unit of the subsidised product exported to the Union.241 The benefit conferred on the recipient is calculated in accordance with the rules contained in Article 6 BASR. Moreover, the Commission has published detailed— but legally non-binding—guidelines on the calculation of the amount of subsidy in countervailing duty investigations.242 Pursuant to said guidelines, with regard to the provision of equity capital, goods or services, or the granting of loans or guarantees, the benefit corresponds to the amount the recipient would have had to pay for the goods etc. in question under normal market conditions.243 Thus, systematically, the benefit conferred by the subsidy corresponds to the dumping margin described above. Should the conditions in the country under investigation not be reflective of market economy conditions, i.e. where there are distortions in the exporting producer’s home State’s economy caused by State intervention, Article 6 (d) subpara. 2 BASR provides for a special set of rules according to which the terms and conditions prevailing in the country of export may be adjusted or even replaced by out-of-country sources. Countervailing measures may only be imposed where the presence of the subsidised imports results in injury to the Union industry244 and the imposition of measures is in the Union interest, Article 31 BASR. The criteria used by the Commission in establishing the existence of injury and in carrying out the Union interest analysis in anti-subsidy investigations are identical to those employed in anti-dumping investigations. Accordingly, reference can again be made to the above sections. In June 2020, the Commission imposed definitive countervailing duties on imports of glass fibre fabrics originating in the People’s Republic of China and

In detail on the notion of “subsidy” cf. Van Bael and Bellis (2019), §§ 10.3–10.6. Article 5 BASR. 241 Article 7 BASR. 242 European Commission, Guidelines for the Calculation of the Amount of Subsidy in Countervailing Duty Investigations, OJ EU 1998 C 394/6. 243 On the WTO level, the calculation of the benefit accruing to the recipient as a result of the granting of loans in non-market economy situations has already been the subject of proceedings before the WTO DSB, cf. in particular Appellate Body Report of 11 March 2011, WT/DS379/ABR, United States – Anti-Dumping and Countervailing Duties (China). 244 Article 8 BASR. 239 240

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Egypt.245 These proceedings are distinct from the Commission’s other countervailing proceedings in that the subsidies to the exporting producers located in Egypt were not granted by the Egyptian government, but by the Chinese government. This stands in apparent conflict to Article 3 (1) lit. a) BASR, which states that a subsidy shall be deemed to exist if “there is a financial contribution by a government in the country of origin or export”. Thus, subsidies granted by a third State to companies seated in another third State would appear not to be caught by this definition. Relying on Article 11 of the International Law Commission (ILC) Articles on the Responsibility of States for Internationally Wrongful Acts,246 the Commission argued that the Chinese subsidies could nonetheless be considered subsidies granted by the government of the exporting country. The Commission based its reasoning on publicly available information showing that the Egyptian government was aware of the heavy State financing the Chinese economic activities in Egypt involved, and that it even welcomed these economic activities.247 This, according to the Commission, constituted a “clear act of acknowledgment and adoption at the highest political level”,248 enabling the Commission to conclude that the subsidies granted by the Chinese government to the exporting producers located in Egypt of the product concerned amounted to financial contributions in the sense of Article 3 (1) BASR.249 The Commission adopted a similar approach in its imposition of countervailing duties of continuous filament glass fibre products originating in Egypt.250 It remains to be seen whether the Commission will attempt to extend this reasoning to exports originating in other countries than Egypt, but which likewise benefit from significant financial contributions by the Chinese government. Lastly, it should be noted that the compatibility of such an approach with the requirements of the ASCM is unclear.

245

Commission Implementing Regulation (EU) 2020/776 of 12 June 2020 imposing definitive countervailing duties on imports of certain woven and/or stitched glass fibre fabrics originating in the People’s Republic of China and Egypt and amending Commission Implementing Regulation (EU) 2020/492 imposing definitive anti-dumping duties on imports of certain woven and/or stitched glass fibre fabrics originating in the People’s Republic of China and Egypt (Commission Implementing Regulation (EU) 2020/776), OJ EU 2020 L 189/1. 246 Article 11 of the ILC Articles on the Responsibility of States for Internationally Wrongful Acts provides that “conduct which is not attributable to a State under the preceding articles shall nevertheless be considered an act of that State under international law if and to the extent that the State acknowledges and adopts the conduct in question as its own”. 247 Commission Implementing Regulation (EU) 2020/776, recitals 690 et seq. 248 Commission Implementing Regulation (EU) 2020/776, recital 692. 249 Commission Implementing Regulation (EU) 2020/776, recital 699. 250 Commission Implementing Regulation (EU) 2020/870 of 24 June 2020 imposing a definitive countervailing duty and definitively collecting the provisional countervailing duty imposed on imports of continuous filament glass fibre products originating in Egypt, and levying the definitive countervailing duty on the registered imports of continuous filament glass fibre products originating in Egypt, OJ EU 2020 L 201/10.

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Types and Level of Measures

As it is the case for anti-dumping measures, anti-subsidy measures are imposed in the form of duties251 or undertakings.252 In another parallel to measures imposed under the BADR, duties are far more frequent than undertakings: over the last few years, the Commission has only accepted undertaking offers in one anti-subsidy proceeding.253 Different from the BADR, however, undertaking offers may not only be presented by the exporting producer offering to revise its prices or to cease exports of the subsidized products,254 but also by the country of origin and/or export agreeing to eliminate or limit the subsidy or take other measures concerning its effects.255 The BASR prescribes that the level of duties imposed may not exceed the amount of countervailable subsidies established.256 The same applies, mutatis mutandis, for price increases under undertakings, which may not be higher than necessary to offset the amount of countervailable subsidies. Opposite to the BADR, the application of the lesser duty rule in anti-subsidy proceedings has become the exception rather than the rule following the entry into force of the amendments introduced by Regulation (EU) 2018/825: now, the level of measures will only be limited by the injury margin where the Commission can clearly conclude that it is not in the Union’s interest to impose measures up to the full margin of subsidisation.257 At the time of writing, the Commission has always set the level of measures at the margin of subsidisation when imposing measures under the reformed BASR.258 Accordingly, the lesser duty rule must be considered as being of only very limited relevance under the current version of the BASR. As already indicated above, these modifications to the scope of application to the lesser duty rule were considered necessary to address the particularly trade-distorting effects of subsidies in a more principled manner.259 Hence,

251

Article 12 (1) BASR and Article 15 (1) BASR. Article 13 (1) BASR. 253 Commission Implementing Decision (EU) 2019/245 of 11 February 2019 accepting undertaking offers following the imposition of definitive countervailing duties on imports of biodiesel originating in Argentina, OJ EU 2019 L 40/71. 254 Article 13 (1) (b) BASR. 255 Article 13 (1) (a) BASR. 256 Article 12 (1) subpara. 3 and Article 15 (1) subpara. 3 BASR. 257 Article 12 (1) subpara. 4 BASR and Article 15 (1) subpara. 4 BASR; Article 13 (1) subpara. 4 BASR. 258 At the time of writing, the most recent new anti-subsidy investigation concluded under the BASR is Commission Implementing Regulation (EU) 2022/433 of 15 March 2022 imposing definitive countervailing duties on imports of stainless steel cold-rolled flat products originating in India and Indonesia and amending Implementing Regulation (EU) 2021/2012 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of stainless steel cold-rolled flat products originating in India and Indonesia, OJ EU 2022 L 88/24. 259 Regulation (EU) 2018/825 of the European Parliament and of the Council of 30 May 2018 amending Regulation (EU) 2016/1036 on protection against dumped imports from countries not 252

2.3

Secondary Law

65

the higher level of measures resulting from the non-application of the lesser duty rule is also intended to deter third States from engaging in such trade-distorting conduct.260 Should the lesser duty rule apply, the injury margin needs to be calculated, just as it is the case for investigations under the BADR. The modifications introduced by Regulation (EU) 2018/825 relating to the calculation of the injury margin correspond to the changes made to the BADR.261 Accordingly, reference can be made to the above sections. It should be noted that, pursuant to Article 24 (1) subpara. 2 BASR and Article 14 (1) subpara. 2 BADR respectively, no product shall be subject to both antidumping and countervailing duties for the same purpose of dealing with an identical situation caused by dumping or subsidisation. This provision is intended to avoid the issue of so-called “double counting”. The term describes a situation where the simultaneous application of anti-dumping and countervailing duties on the same imported products results, at least to some extent, in the offsetting of the same subsidisation twice.262 This may in particular be the case where the normal value of the products is not based on the exporter’s prices in its home country, but constructed due to the existence of subsidisation in its home country. Here, the dumping margin does not only reflect the price discrimination between the domestic and export market, but also the economic distortions affecting the producer’s costs of production, namely the subsidies.263 Previously, the EU avoided situations of double counting by limiting the level of measures imposed to the injury margin. This prevented the same subsidisation from being addressed twice.264 As the scope of application of the lesser duty rule was limited during the EU’s modernization of its trade defence instruments, the Commission must adopt other approaches to avoid instances of double counting. In the Glass Fibre Fabrics proceedings, the Commission did so by deducting the full amount of the countervailing duty rate from the dumping margin, thereby ensuring that the same subsidisation would not be taken into account both during the anti-dumping investigation (where the new methodology had been applicable) and the parallel anti-subsidy investigation (where the lesser duty rule did not apply).265

members of the European Union and Regulation (EU) 2016/1037 on protection against subsidised imports from countries not members of the European Union, OJ EU 2018 L 143/1, recital 10. 260 Hoffmeister (2015), pp. 365, 370. 261 Cf. Article 12 (1a), (1b) BASR. 262 Appellate Body Report of 11 March 2011, WT/DS379/AB/R, United States – Definitive AntiDumping and Countervailing Duties on Certain Products from China, para. 541. 263 On the issue of double counting cf. Van Bael and Bellis (2019), § 12.02 [E]. 264 Cornelis (2018), pp. 539, 541. 265 Commission Implementing Regulation (EU) 2020/776 of 12 June 2020 imposing definitive countervailing duties on imports of certain woven and/or stitched glass fibre fabrics originating in the People’s Republic of China and Egypt and amending Commission Implementing Regulation (EU) 2020/492 imposing definitive anti-dumping duties on imports of certain woven and/or stitched

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Temporal and Procedural Aspects

The initiation of an investigation is governed by Article 10 BASR. Due to the similarities to the initiation of investigations under the BADR, reference can be made to the corresponding sections above. Likewise, countervailing duties are imposed by means of regulation, and are usually applied on a Union-wide basis. Countervailing measures may only be applied to products which enter free circulation after the provisional or definitive measure taken enters into force. The provision on the retroactive application of countervailing duties, Article 16 BASR, likewise resembles the provision contained in the BADR. Countervailing measures remain in force as long as, and to the extent that, it is necessary to counteract the countervailable injurious subsidies.266 In a difference to anti-dumping duties, provisional countervailing duties may only be imposed for a maximum period of four months, without the possibility of extension.267 As a rule, countervailing measures expire after five years. However, both an earlier expiry as well as the extension of measures are possible: in yet another parallel to the BADR, interim reviews268 and expiry reviews269 assessing the need for the continuous application of countervailing measures can be carried out by the Commission. The relevance of these reviews is reflected in the Commission’s statistics on the EU’s trade defence measures: over the last years, almost half of the countervailing investigations initiated by the Commission were either expiry or interim reviews.270 The procedure to be adhered to in adopting regulations imposing provisional or definitive anti-subsidy duties, in particular concerning the involvement of the Member States through the Trade Defence Committee, corresponds to the procedure applicable concerning the imposition of anti-dumping duties.271

glass fibre fabrics originating in the People’s Republic of China and Egypt, OJ EU 2020 L 189/1, recitals 1117–1118, 1122, 1136 and Article 2. 266 Article 17 BASR. 267 Article 12 (5) BASR. 268 Article 19 BASR. 269 Article 18 BASR. 270 European Commission, Anti-Dumping, Anti-Subsidy, Safeguard Statistics Covering 01/12/ 2021 – 31/12/2021 (2022), p. 1, available at https://trade.ec.europa.eu/doclib/docs/2022/february/ tradoc_160048.pdf: of six investigations, one was an expiry review, and two were interim reviews. Similarly, in 2020, of six countervailing investigations, two were expiry reviews and one an interim review, cf. European Commission, Anti-Dumping, Anti-Subsidy, Safeguard Statistics Covering the Full Year 2020 (2021), p. 1, available at https://trade.ec.europa.eu/doclib/docs/2020/january/ tradoc_158564.pdf. 271 Article 25 BASR.

2.4

2.4

Safeguard Measures

67

Safeguard Measures

As indicated at the beginning of this section, Regulation (EU) 2015/478 on Common Rules for Imports is another element of the EU’s trade defence arsenal. However, the Regulation is of limited practical relevance, with only one safeguard measure concerning steel products currently in force.272 The measures are set to expire mid-2024.273 When compared with the provisions on anti-dumping or anti-subsidy proceedings, the imposition of surveillance and safeguard measures under Regulation (EU) 2015/478 on Common Rules for Imports is subjected to completely different rules. While Article 1 (2) re-affirms the basic principle of freedom of import, Articles 15 et seq. of the Regulation lay out the conditions under which the EU may derogate from this principle by imposing safeguard measures. These include the imposition of import quotas or tariff quotas, but also increasing existing tariff rates and other import restrictions.274 In order for safeguard measures to be imposed under Regulation (EU) 2015/478, there has to be a significant increase in imports of a certain product into the EU and/or on such terms or conditions as to cause or threaten to cause material injury to the Union producers of the product in question. Accordingly, the investigations carried out by the Commission may be limited to assessing the volume of imports into the EU and the impact of such imports on the situation of the Union industry. The market behaviour of third country exporting producers is irrelevant and therefore does not need to be investigated: other than under the BADR and the BASR, it is not the idea that a certain trading practice is considered unfair which serves as the justification for the imposition of trade-restrictive measures, but the mere sudden surge in the level of imports. Other than proceedings carried out under the basic anti-dumping regulation or the basic anti-subsidy regulation, Regulation (EU) 2015/478 does not confer a right of application to companies affected by the increase in imports or their trade associations. Instead, investigations are initiated ex officio by the Commission where it considers there to be sufficient evidence to do so, Article 5 of Regulation (EU) 2015/ 478. Pursuant to Article 2 of Regulation (EU) 2015/478, it is upon the Member States to inform the Commission if trends in imports appear to call for surveillance or safeguard measures. As it is the case in anti-dumping and anti-subsidy proceedings, the Commission acts as the investigating authority. Measures are adopted by the Commission in cooperation with the Committee on Safeguards following the conclusion of the investigation, Article 15 (6), (16) subpara. 1 in conjunction with Article 3 (3) of Regulation (EU) 2015/478 and Article 5 Comitology Regulation. In yet another difference to anti-dumping and countervailing proceedings, the

272 However, the EU has re-opened its safeguard investigation concerning imports of rice originating in Cambodia and Myanmar at the beginning of 2023, OJ EU 2023 C 18/8. 273 Commission Implementing Regulation (EU) 2021/1029 of 24 June 2021 amending Commission Implementing Regulation (EU) 2019/159 to prolong the safeguard measure on imports of certain steel products, OJ EU 2021 L 225/1. 274 On the different forms of safeguard measures cf. van Bael and Bellis (2019), § 14.

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Commission can only adopt safeguard measures if the Appellate Committee votes in favour of the imposition of measures by qualified majority, Article 6 (4) Comitology Regulation. The safeguard measures may only remain in force as long as they are necessary to prevent or remedy serious injury and to facilitate adjustment on the part of Union producers, Article 19 (1) of Regulation (EU) 2015/478. As a rule, the duration of the measures—including provisional measures—may not exceed four years, however the measures may remain in force for a maximum of eight years if extended, Article 19 (5) of Regulation (EU) 2015/478. In principle, the measures imposed must apply to all imports irrespective of their source.275 Exceptions apply to developing country members of the WTO, which may not be subjected to safeguard measures where the country’s share of Union imports of the product concerned does not exceed 3%, provided that developing country members of the WTO with less than a 3% import share collectively account for not more than 9% of total Union imports of the product concerned.276 Moreover, the application of safeguard measures may be excluded between parties to an FTA.277 In the recent safeguard measures imposed on steel products, the Commission further limited the measures’ scope of application by exempting products originating in countries members to the European Economic Area (EEA). The Commission found that, given the close economic links between the EEA and the EU and the maturity and saturation of the steel industry in the EEA markets, imports of the products concerned from EEA members had only very marginally, if at all, contributed to the threat of serious injury faced by the Union steel industry.278

2.4.1

Trade Barriers Regulation

2.4.1.1

Objectives

The EU’s Trade Barriers Regulation279 (TBR) bridges the gap between the interests of private commercial agents engaging in international trade and the WTO’s intergovernmental dispute settlement procedure. As mentioned previously, its central accomplishment lies in the establishment of a formalized procedure within which private individuals and companies may bring obstacles to trade in third countries to the EU institutions’ attention, with the aim of the institutions taking action against the adverse trade effects or the injury resulting therefrom.280 As likewise mentioned 275

Article 2.2 ASM. Article 18 of Regulation (EU) 2015/478. 277 Cf. above p. 7. 278 Commission Implementing Regulation (EU) 2018/1013 of 17 July 2018 imposing provisional safeguard measures with regard to imports of certain steel products, OJ EU 2018 L 181/39, recital 80. 279 Regulation (EU) 2015/1843 (TBR) (Chap. 1, fn. 14). 280 Cf. Article 1 TBR. 276

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above, in a central difference to the system of ISDS, private individuals cannot participate in intergovernmental dispute settlement procedures. The Trade Barriers Regulation has proven a successful instrument in strengthening individuals’ position in this regard: since 1996, a total of 24 TBR examination procedures have been initiated, although not all of these have resulted in WTO dispute settlement proceedings.281 As of August 2022, the EU has initiated 108 cases before the DSB.282

2.4.1.2

Substantive Preconditions for the Imposition of Measures Under the Trade Barriers Regulation

The Trade Barriers Regulation allows for measures to be taken against third countries if they create or uphold barriers to trade that either cause injury to EU companies within the internal market itself or that result in adverse trade effects in the third country market. A relevant obstacle to trade is any trade practice adopted or maintained by a third country in respect of which international trade rules establish a right of action. Such a right of action exists when international trade rules either prohibit a practice outrightly, or give another party, affected by the practice, a right to seek elimination of the effect of the practice in question.283 As emphasized in the jurisprudence of the EU Courts, such a right of action is an essential element in assessing the existence of an obstacle to trade.284 The Regulation defines injury as any material injury which an obstacle to trade causes or threatens to cause, in respect of a product or service, to a Union industry, on the market of the Union.285 Adverse trade effects are considered to exist where an obstacle to trade causes or threatens to cause adverse effects in respect of a product or service to Union enterprises on the market of any third country, and which have a material impact on the economy of the Union or of a region of the Union, or on a sector of economic activity in the Union. However, the fact alone that the complainant suffers from such adverse effects is not sufficient to justify, on its own, the Union institutions proceeding with any action.286 Should the Commission have obtained sufficient evidence to justify the initiation of an examination procedure, it further has to examine whether this is necessitated by the Union interest. The above-mentioned conditions have to be fulfilled cumulatively in order for a procedure to be initiated.

281

European Commission, Trade Barrier Investigations, available at https://ec.europa.eu/trade/ policy/accessing-markets/dispute-settlement/trade-barrier-investigations/. 282 World Trade Organization, Disputes by Member, available at https://www.wto.org/english/ tratop_e/dispu_e/dispu_by_country_e.htm. 283 Article 2 (1) (a) TBR. 284 General Court, judgment of 14 December 2004, case T-317/02, ECLI:EU:T:2004:360, FICIF et al. v Commission, para. 53. 285 Article 2 (1) (c) TBR. 286 Article 2 (1) (d) TBR.

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The Course of Proceedings Under the Trade Barriers Regulation

Any natural or legal person, or any association, whether or not having a legal personality, acting on behalf of a Union industry or singular Union enterprises may submit a complaint to the Commission, which will then decide upon the initiation of an investigation, Article 5 TBR. Complaints concerning obstacles to trade which are considered to cause injury to the Union industry are lodged on behalf of the Union industry,287 Article 3 TBR. Conversely, a complaint may be lodged on behalf of certain Union enterprises where the enterprises are considered as having suffered adverse trade effects as a result of obstacles to trade that have an effect on the market of a third country, Article 4 TBR. Furthermore, any Member State may ask the Commission to initiate procedures under the Trade Barriers Regulation, Article 6 TBR. This partly compensates for the fact that the division of competences between the EU and the Member States precludes the latter from initiating WTO-proceedings against other WTO members on their own motion,288 despite their formal right to do so under WTO law. Enterprises which are not formed in accordance with the law of a Member State or which do not have their registered office, central administration or principal place of business within the Union (that is, third-country enterprises) cannot initiate proceedings. In any event, the complainant has to provide sufficient evidence regarding the existence of a barrier to trade and of the existence of injury within the meaning of the Regulation.289 Should it become apparent that the complaint by the Member State or on behalf of the Union industry or Union companies does not provide sufficient evidence to justify initiating an investigation, the complainant shall be informed.290 Once a complaint has been lodged, the Commission shall decide on the opening of a Union examination procedure within 45 days.291 Should the Commission take a positive decision on the initiation of a Union examination procedure, the course of the proceedings will be governed by Article 9 TBR. The procedure is similar to investigations carried out under the basic antidumping regulation and the basic anti-subsidy regulation, and it has to be concluded after seven months at the latest.292

The notion of “Union industry” is defined in Article 2 (1) (e) TBR. The EU is exclusively competent as regards the bloc’s common commercial policy vis-à-vis third States, which includes the initiation of dispute settlement proceedings under the DSU, cf. Herrmann and Streinz (2022), para. 154. 289 Article 3 (2) and Article 4 (2) TBR. 290 Article 5 (3) TBR and Article 6 (4) TBR. 291 Article 5 (4) subpara. 2 and Article 6 (5) TBR. 292 Article 9 (8) TBR. 287 288

2.4

Safeguard Measures

2.4.1.4

71

Measures

Should the Commission’s investigation reveal that the Union’s interests indeed require intervention in order to ensure the exercise of the Union’s rights under international trade rules with a view to removing the injury or the adverse effects to trade caused by the trade barriers in question, the Commission decides on the appropriate measures in accordance with Article 14 (2) TBR and Article 207 TFEU (and, where necessary, with Article 13 (1) TBR). These measures include the suspension or withdrawal of concessions agreed upon in previous commercial policy negotiations, the raising of existing customs duties or the introduction of any other charge on imports, the introduction of quantitative restrictions or any other measures modifying import or export conditions or otherwise affecting trade with the third country concerned.293 Should international law require for the EU to initiate consultations or a dispute settlement procedure before resorting to such trade restrictive measures, the measures just enumerated may only be imposed after that procedure has been terminated. The Union further has to take account of the results of the procedure.294 On the other hand, where intervention by the Union is not considered necessary, the proceedings are terminated in cooperation with the Trade Barriers Committee after a review procedure has been carried out (Articles 12 (1), 7 (3) TBR in conjunction with Article 5 Comitology Regulation).295 Should the examination procedure have led the EU’s trade partner(s) to concede and lift the trade-restrictive practice, the procedure can be suspended in cooperation with the Trade Barriers Committee in compliance with the rules of the advisory procedure set out in Article 4 of the Comitology Regulation (Articles 12 (2), 7 (2) TBR in conjunction with Article 4 Comitology Regulation). Thus, in a difference to the review procedure, it is only “recommended” for the Commission to take the opinion of the Trade Barriers Committee into account as far as possible when deciding on a suspension of the proceedings, but it is under no obligation to do so. The Commission is exclusively competent in deciding upon the initiation and conclusion of proceedings as well as the course of proceedings; the Member States are merely informed of the Commission’s decisions.296 This confers a significant degree of procedural autonomy to the Commission with regard to the initiation of international dispute settlement proceedings. The Member States cannot even restrict this autonomy through a vote in the Trade Barriers Committee. In particular, the TBR does not confer a right to the Member States—or the complainant EU industry—as regards the initiation of international dispute settlement proceedings by the Commission.297

293

Article 13 (3) TBR. Article 13 (2) TBR. 295 On the review procedure in anti-dumping proceedings cf. above p. 59 et seq. 296 Cf. Article 14 TBR. 297 Berrisch and Kamann (2016), para. 119. 294

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Enforcement Regulation

The EU’s latest attempts at upgrading its trade policy toolbox include amendments to the Enforcement Regulation. As mentioned above, the Regulation governs the exercise of the Union’s rights regarding the suspension or withdrawal of trade concessions or other obligations stemming from international trade agreements in accordance with international (economic) law.298 One of the situations governed by the Regulation are dispute settlement procedures within the framework of the WTO. The previous version of the Enforcement Regulation required the dispute to also be brought to the appeal stage of dispute settlement proceedings in order for the EU to be able to react. This presented problems due to the ongoing blockade of the WTO Appellate Body. The EU, along with 26 other WTO members, has sought to resolve this situation by agreeing to interim arrangements for appeal arbitration pursuant to Article 25 of the WTO Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), the so-called “Multi-Party Interim Appeal Arbitration Arrangement”.299 This, however, does not ensure that all disputes pertaining to WTO law are resolved: where the second member involved in the dispute does not enter into such an arrangement and instead files an appeal to the (dysfunctional) WTO Appellate Body, the resolution of the dispute is effectively blocked.300 The recent reform of the Enforcement Regulation seeks to remedy this situation. It now permits the EU to impose trade restrictive measures where, following the circulation of a WTO panel report upholding, in whole or in part, the claims brought by the Union, an appeal cannot be completed and the third country has not agreed to interim appeal arbitration.301 As comparable situations—namely the blockade of attempts at dispute resolution on part of the EU by one’s trading partners—can also arise under other trade agreements, this also applies to those.302 Where this is the case, the trade restrictive measures to be adopted by the EU include inter alia the suspension of tariff concessions or the introduction of quantitative restrictions on imports or exports of goods.303

298

Cf. above p. 19. Cf. Statement on a Mechanism for Developing, Documenting and Sharing Practices and Procedures in the Conduct of WTO Disputes (JOB/DSB/1/Add.12), 30 April 2020, available at https:// trade.ec.europa.eu/doclib/docs/2020/april/tradoc_158731.pdf. Cf. further Gonzales and Sakhi (2022), p. 436. 300 Cf. recital 3 of Regulation (EU) 2021/167 of the European Parliament and of the Council of 10 February 2021 amending Regulation (EU) No 654/2014 concerning the exercise of the Union’s rights for the application and enforcement of international trade rules, OJ EU 2021 L 49/1. 301 Article 3 (aa) of Regulation (EU) No. 654/2014. 302 Article 3 (ba) of Regulation (EU) No. 654/2014. 303 Article 5 of Regulation (EU) No 654/2014. 299

References

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References Academic Literature Antonini (2014) Access to (confidential) data in EU trade defence proceedings. Glob Trade Cust J 9(7/8) Berrisch, Kamann (2016) In: Krenzler, Herrmann, Niestedt (eds) Rechtsschutz im EU-Außenwirtschaftsrecht Boysen (2020) In: Schulze, Janssen, Kadelbach (eds) Europarecht, § 33 Außenwirtschaftsrecht Bungenberg, Reinhold (2021) Artikel 2 AD-GVO. In: Krenzler, Herrmann, Niestedt (eds) Cornelis (2018) The EU’s modernization regulation: stronger and more effective trade defence instruments? Glob Trade Cust J 13(11) Cottier, Trinberg (2015) Art. 207 AEUV. In: von der Groeben, Schwarze, Hatje (eds) Europäisches Unionsrecht Duramy (2018) Anti-dumping in Europe: what about us(ers)? Glob Trade Cust J 13(11, 12) Gambardella (2011) Transparency in EU antidumping investigations. Glob Trade Cust J 6(3) Gonzales, Sakhi (2022) The multi-party interim appeal arbitration arrangement: an update. Glob Trade Cust J 17(10) Hartmann (2018) Artikel 21 AD-GVO. In: Krenzler, Herrmann, Niestedt (eds) Herrmann (2004) Der gemeinschaftsrechtliche Begriff der Beihilfe. ZEuS (3) Herrmann (2008) Common Mark Law Rev 45(5) Herrmann, Müller (2017) Die Gewährung des “Marktwirtschaftsstatus” gegenüber China im Antidumpingrecht: Ein Belastungstest für die europäische Wirtschaftsverfassung. Zeitschrift für europäisches Wirtschaftsrecht (EuZW) 2017 Herrmann, Streinz (2022) Die EU als Mitglied der WTO. In: von Arnauld (ed) Europäische Außenbeziehungen Hoffmeister (2015) Modernising the EU’s trade defence instruments: mission impossible? In: Herrmann, Simma, Streinz (eds) Trade policy between law, diplomacy and scholarship Hoffmeister (2020) The devil is in the detail: a first guide on the EU’s new trade defence rules. In: Weiß, Furculita (eds) Global politics and EU trade policy Huyghebaert (2019) Changing the rules mid-game: the compliance of the amended EU basic antidumping regulation with WTO law. J World Trade 53(3) Kim (2022) Suspension of anti-dumping measures in the EU: a new trend or not? Glob Trade Cust J 5(17) Krajewski (2006) Die Gemeinsame Handelspolitik und das Primat der Gemeinsamen Außen- und Sicherheitspolitik im Verfassungsvertrag. In: Herrmann, Krenzler, Streinz (eds) Die Außenwirtschaftspolitik der Europäischen Union nach dem Verfassungsvertrag Lukas (2000) Stand und Perspektiven des EG Antisubventionsrechts. Europäisches Wirtschaftsund Steuerrecht 2000 Luo (2010) Anti-dumping in the WTO, the EU and China: the rise of legalization in the trade regime and its consequences Lux (2014) Access to information held by EU-institutions for economic operators and national courts. Glob Trade Cust J 9(9) MacLean (2012) Adored and despised in equal measure: an assessment of the EU’s principle of market economy treatment in anti-dumping investigations against China. In: Herrmann, Terhechte (eds) European Yearbook of International Economic Law 2012 Melin (2016) Users in EU trade defence investigations. Glob Trade Cust J 11(3) Mueller, Khan, Scharf (2009) EC and WTO anti-dumping law: a handbook Müller-Ibold (2013) Common commercial policy after Lisbon: the European Union’s dependence on secondary legislation. In: Bungenberg, Herrmann (eds) Common commercial policy after Lisbon

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Newman (2011) Where the EU anti-dumping system continues to fail on issues relating to transparency and predictability. Glob Trade Cust J 6(2) Reinhold, Van Vaerenbergh (2021) Significant distortions under Article 2 (6a) BADR: three years of commission practice. Glob Trade Cust J 16(5) Rovetta, Gambardella (2014) Access to EU antidumping/subsidy confidential files. Glob Trade Cust J 9(7/8) Shadikhodjaev (2018) Non-market economies, significant market distortions, and the 2017 EU antidumping amendment. J Int Econ Law 21(4) Snyder (1998) International trade and customs law of the European Union Suse (2017) Old wine in a new bottle: the EU’s response to the expiry of Section 15(a)(ii) of China’s WTO Protocol of Accession. J Int Econ Law 20(4) Tietje (2009) Die Außenwirtschaftsverfassung der EU nach dem Vertrag von Lissabon. Beiträge zum Transnationalen Wirtschaftsrecht, Issue No. 83 Tietje, Kluttig (2008) The definition of community industry in EU antidumping law. Glob Trade Cust J 3(3) Trapp (2021) Das Weißbuch der Kommission zur Gewährung fairer Wettbewerbsbedingungen bei Subventionen aus Drittstaaten. Zeitschrift für Europäisches Wirtschaftsrecht (EuZW) 2020 Trapp (2022) The European Union’s trade defence modernisation package – a missed opportunity at reconciling trade and competition? Van Bael, Bellis (2019) EU anti-dumping and other trade defence instruments Vermulst, Fjellner (2015) An APO system in EU trade defence investigations: no guts, no glory. Glob Trade Cust J 10(4) Vermulst, Sud (2018) Treatment of China in EU anti-dumping investigations post-December 2017: Plus ça change, plus c’est la même chose. In: Nedumpara, Zhou (eds) Non-market economies in the global trading system: the special case of China Vermulst, Sud, Evenett (2016) Normal value in anti-dumping proceedings against China post-2016: are some animals less equal than others? Glob Trade Cust J 11(5) Wenig (1996) Public interest litigation in anti-dumping law. In: Micklitz, Reich (eds) Public interest litigation before European courts Wessels, Larik (2020) EU external relations law: texts, cases and materials Willems, Natens, Kamau (2022) Inward processing in EU anti-dumping proceedings. Glob Trade Cust J 17(6) Wüstenberg (2019) Anti-dumping off the rails: the European Union’s practice to alleged input dumping. Glob Trade Cust J 14(9) Yalcin, Felbermayr, Sandkamp (2016) New trade rules for China? Opportunities and threats for the EU

Chapter 3

Enforcement

3.1 3.1.1

Competences Union Competence

According to the principle of conferral as laid out in Article 5 (1), (2) TEU, the EU shall act only within the limits of the competences conferred upon it by the Member States in the Treaties to attain the objectives set out therein. As can be inferred from the above-mentioned provisions,1 for the area of trade defence, this signifies that the EU has the exclusive legislative competence in the area of common commercial policy, which also extends to the Union’s trade defence instruments.2 The enforcement powers are governed by the parameters laid down in EU secondary legislation. Once imposed, the trade defence instruments are implemented by the Member States’ customs authorities within the framework of direct enforcement by the Member States,3 as is standard for EU customs law (application of additional tariffs and quantitative import restrictions). Nonetheless, the core of the administrative law of the EU’s trade defence instruments lies at the decision regarding their application. This decision, which necessarily occurs before the measures are implemented by the Member States’ customs authorities, usually cannot be subjected to legal review at the level of the enforcement of the measures.4 The decisions on the use of trade defence instruments taken by the EU institutions must comply with the relevant primary and secondary legislation. The Member States are involved in the decision-making process to varying degrees via the relevant committees, in particular the above-mentioned Trade Defence Instruments 1

Cf. above p. 19. European Court of Justice’s Opinion 2/15 of 16 May 2017, ECLI:EU:C:2017:376, EU-Singapore FTA, paras. 42–43. 3 Article 290 (1) TFEU. 4 On the judicial review of anti-dumping measures cf. below p. 83 et seq. 2

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 C. Herrmann, P. Trapp, EU Trade Defence Law and Practice, SpringerBriefs in Law, https://doi.org/10.1007/978-3-031-25330-0_3

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Committee and the Trade Barriers Committee, within the framework of the procedures set out in the Comitology Regulation.5

3.1.2

Institutional Competence

Pursuant to Article 13 (2) TEU, each institution shall act within the limits of the powers conferred on it in the Treaties, and in conformity with the procedures, conditions and objectives set out therein. The Treaty of Lisbon has brought about a fundamental change in this respect, with the role of the European Parliament being elevated to that of a co-legislator during the ordinary legislative procedure set out in Article 294 TFEU. However, with regard to the bloc’s common commercial policy, the ordinary legislative procedure is only applicable to the regulations adopted to define the framework for implementing the common commercial policy as per Article 207 (2) TFEU. Accordingly, the European Parliament’s involvement in the legislative process does not extend to the adoption of trade defence instruments in individual cases—Parliament would not even have the necessary capacities for the administrative tasks involved—but merely the adoption of secondary legislation, which then provides the basis for the individual measures taken.6 In deviation from the rule laid out in Article 291 (1) TFEU according to which, as a rule, it is the Member States enforcing EU law, Article 291 (2) TFEU applies to the enforcement of the EU’s trade defence instruments, as their implementation requires uniform conditions throughout the Union, e.g. with regard to the adoption of provisional and definitive measures or the termination of an investigation. Hence, in accordance with Article 291 (2) TFEU, the necessary implementing powers have been conferred on the Commission. The Commission exercises said powers in cooperation with the Member States and in accordance with the provisions of the Comitology Regulation.7 As detailed above, while the Comitology Regulation does not mandate for the Member States’ opinion to be taken into consideration during the advisory procedure (Article 4 Comitology Regulation), the Member States’ influence is greater where the review procedure (Article 5 Comitology Regulation) is applied. In the latter case, they may influence the Commission’s decision making via various committees, and they can block Commission proposals through a negative qualified majority vote. As can be inferred from the institutional set-up detailed above, in the area of trade defence instruments, the majority of the enforcement powers lies with the Commission. It is the authority responsible for carrying out the necessary investigations (cf. e.g. Article 6 BADR and Article 11 BASR), it submits proposals on measures to the Trade Defence Instruments Committee which will automatically enter into force

5

Cf. above p. 59 et seq. Cf. Tietje (2009); Krajewski (2006), pp. 63, 69 et seq. On the secondary legislation cf. above p. 24 et seq. 7 Regulation (EU) No. 182/2011 (Chap. 1, fn. 67). 6

3.1

Competences

77

unless they are rejected by qualified majority (Articles 9 (2), (4), 14a (1), 15 (3) BADR and Articles 14 (2), 15 (1), 25 (3) BASR) and/or takes legally binding decisions itself, which the Committee can only revise by means of a negative qualified majority vote where the review procedure is applicable (Articles 7 (4), 15 (4) BADR and Articles 12 (3), 25 (4) BASR in conjunction with Article 8 Comitology Regulation). Ultimately, the only areas where the Commission’s competences are even more extensive are EU competition law and State aid law.8 The scope of the Commission’s competences in the area of trade defence has developed over time.9 This is reflective of the growing confidence in the Commission’s handling of the subject matter. At the same time, it is testimony to the use of trade-defence instruments being determined by the increasingly detailed rules laid out in international economic law, prescribing under which circumstances States may resort to their imposition. Moreover, the application of the Commission’s powers is subject to intensive exchange between the Member States and the Commission occurring through the various trade policy committees monitoring the Commission’s actions. Lastly, it should be noted that Article 11 of the Comitology Regulation provides that where a basic act is adopted under the ordinary legislative procedure, either the European Parliament or the Council may at any time indicate to the Commission that, in its view, a draft implementing act exceeds the implementing powers provided for in the basic act. In such a case, the Commission shall review the draft implementing act, taking account of the views expressed, and inform the European Parliament and the Council whether it intends to maintain, amend or withdraw the draft implementing act.10

8 The Commission is the EU’s competition authority; as such, it is responsible for carrying out investigations and taking decisions both in the area of competition law and in State aid law. In detail cf. Article 103 TFEU in conjunction with Council Regulation (EC) No. 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty, OJ EC 2002 L 1/1, Article 105 TFEU and Article 108 TFEU in conjunction with Council Regulation (EC) No. 659/1999 of 22 March 1993 laying down detailed rules for the application of Article 93 of the EC Treaty, OJ EC 1999 L 83/1 and the competences set out therein. 9 Cf. for example the provisions of Articles 15 to 17 (in conjunction with Article 25) on the imposition of provisional and definitive anti-dumping and countervailing measures contained in Regulation (EEC) No. 459/68 of the Council of 10 December 1968 establishing a special procedure for the importation of certain products originating in certain third countries, OJ (EEC) 1968 L 303/43, which required a Council Decision both with regard to the imposition of definitive measures and the confirmation or the amendment of provisional measures imposed by the Commission. 10 On the European Parliament’s and the Council’s right of scrutiny Fabricius (2014), p. 453 et seq.

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3.2

3

Enforcement

Procedural Rights of the Parties to the Proceedings and Rule of Law Requirements

The use of trade defence instruments both seriously interferes with the competitive relationships between firms and requires for the undertakings concerned to provide the Commission with a considerable amount of sensitive information in order for the proceedings to be based on a sound factual basis. This applies with regard to companies from third countries that are faced with the accusation of practising dumping or of having received subsidies as well as members of the EU industry which are suffering injury as a result of the importation of dumped or subsidized goods. In this context, companies’ legitimate expectations regarding the confidentiality of commercially sensitive information and the interests of companies adversely affected by the imposition of trade defence measures in having the reasons underlying the decision taken by the Commission disclosed must be reconciled. Moreover, the Commission must state the reasons on which it bases the adoption of an implementing regulation as mandated by Article 296 (2) TFEU. It should be noted that according to the settled jurisprudence of the EU Courts, the institutions are not obliged to adopt a position on all arguments relied on by the parties concerned, but that it is sufficient to set out the facts and the legal considerations having been of decisive importance in the context of the decision.11 The procedural design of the BASR and the BADR is heavily influenced by the requirements set out in the ASCM and the ADA, respectively.12 In particular Articles 5 and 6 BADR and Articles 10 and 11 BASR contain comprehensive provisions common to those generally applied in administrative procedures restricting individuals’ rights. These are reflected in the BADR and the BASR. The core procedural principles set out therein are: – the right of the companies concerned to be heard (cf. in particular Articles 5 (10), (11), 6 (5) to (7), 7 (1) (b), 20 BADR and Articles (10 (7) (12), 11 (5) to (7), (10), 12 (1) (b), 30 BASR),13 – the written form of proceedings ( Articles 5 (1) in conjunction with (2), (10), 6 (5), (6), 20 (1), (3), (4) BADR and Articles 10 (1) in conjunction with (2), (12), 11 (6), (7), 30 (1), (3) and (4) BASR)14 – the principles of transparency15 (Articles 5 (5), (9) (10) and (11), 6 (3), (6) and (7), 19, 20 BADR and Articles 10 (7), (11) to (13), 11 (3), (6), (7), 29, 30 BASR)

11

General Court, judgment of 5 May 2021, case T-45/19, ECLI:EU:T:2021:238, Acron PAO et al v Commission, para. 49; General Court, judgment of 15 March 2018, T-211/16, ECLI:EU:T:2018: 148, Caviro Distillerie et al v Commission, para. 104 and the case law cited. 12 Cf. Article 6 ADA and Article 12 ASCM. 13 On the right to be heard cf. Article 6.1, 6.2, 6.4 and 6.9 ADA; Article 12.1, 12.2, 12.3 ASCM. 14 This is expressed in Article 6.1 and 6.3 ADA; Article 12.1 and 12.2 ASCM. 15 On the principle of transparency cf. further Gambardella (2011), p. 157 et seq.

3.2

Procedural Rights of the Parties to the Proceedings and Rule of. . .

79

and confidentiality (cf. in particular Articles 5 (11), 6 (3) and (6), 19 BADR and Articles 10 (13), 11 (3) and (6), 29 BASR).16 These principles, which sometimes overlap, have to be balanced. As a rule, the authorities have to verify the accuracy of the information provided and may, if necessary, conduct investigations in the territory of other WTO members (so-called “on-the-spot investigations”).17 In anti-dumping and anti-subsidy investigations, the Commission may request Member States to carry out all necessary checks and inspections, and to carry out investigations in third countries (Article 6 (4) BADR and Article 11 (4) BASR), but it may also carry out investigations in third countries itself (Article 16 (2) BADR and Article 26 (2) BASR). In most cases, this involves the inspection of the production process and the accounting records of the companies under investigation. Moreover, the Commission will send out anti-dumping questionnaires to the interested parties. None of the provisions under the basic regulations confer on the Commission any power to compel the interested parties to participate in the investigation or to provide information.18 However, a lack of cooperation might nonetheless be detrimental to the interests of the interested parties, as the Commission may then base its findings on the facts available (Article 18 BADR and Article 28 BASR).19 The imposition of anti-dumping or anti-subsidy measures adversely affects the interests of the buyers of imported goods, as it will result in the prices of the goods to increase. Articles 5 (10), 6 (5) BADR and Article 10 (12), 11 (5) BASR take this into account as they prescribe that interested parties may make themselves known to the Commission and apply to be heard by the Commission in order submit their views and present information relevant to the investigation.20 Industrial users of the products and consumer organizations are among those who are considered “interested parties” within the meaning of the provisions.21 However, the negative impact the imposition of an anti-dumping or anti-subsidy measure would have on the prices asked for a product within the market of import is not a circumstance that has to be taken into consideration on a mandatory basis. Therefore, the above-mentioned provisions of the BADR and the BASR are of limited practical relevance. At most, information provided by the above-mentioned market participants on other possible

16

Article 6.1.2, 6.2, 6.4 and 6.5 ADA; Article 12.1.2, 12.3 and 12.4 ASCM. Article 6.6, 6.7 ADA in conjunction with Annex I ADA, Article 12.5, 12.6 in conjunction with Annex VI ASCM. 18 European Court of Justice, judgment of 12 May 2022, case C-260/20 P, ECLI:EU:C:2022:370, European Commission v Hansol Paper Co. Ltd., para. 47. 19 Article 6.8 ADA in conjunction with Annex II ADA, Article 12.7 ASCM. Cf. further Kuplewatzky (2020), p. 366 et seq. 20 Article 6.12 ADA (Article 12.10 ASCM). 21 Industrial users and consumer organizations may be considered as constituting such “interested parties”, cf. General Court, judgment of 27 January 2000, case T-256/97, ECLI:EU:T:2000:21, BEUC v Commission. Cf. further Rados, in: Krenzler/Herrmann/Niestedt (eds) (Chap. 2, fn. 152) (2018), Art. 6 AD-GVO, paras. 14 et seq. 17

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causes for the injury sustained by the EU industry may serve to sever the causal link between the injury and the presence of dumped or subsidized products (cf. Article 3 (7) BADR and Article 8 (6) BASR).22 For example, consumer organizations may provide the Commission with information on declines in demand or changes in consumption habits which exculpate the importers. Lastly, the parties affected by the Commission’s decision to initiate proceedings are advised of said decision in accordance with Article 5 (11), 14 (2) BADR and Articles 10 (13), 24 (2) subpara. 2 BASR. Identical to the initiation of proceedings, provisional or final determinations, decisions to accept price undertakings and the expiry of definitive anti-dumping or anti-subsidy measures must be made public. The information must be communicated to the WTO members concerned as well as to other interested parties. The relevant provisions of the BADR and the BASR on the publication of the Commission’s decisions are Articles 5 (9), 11 (2) subpara. 4, 14 (2) BADR and Articles 10 (11), 18 (4), 24 (2) subpara. 1 BASR. Moreover, the complainants, importers and exporters and their representative associations, and representatives of the exporting country, may request disclosure of the details underlying the essential facts and considerations on the basis of which measures have been imposed. This applies to both provisional and definitive measures, cf. Article 20 BADR and Article 30 BASR.23 More detailed provisions on the information and data to be communicated in this context are contained in Articles 6 (11), 14 (2) BADR and Articles 10 (13), 24 (2) subpara. 2 BASR.24 Neither the GATT 1994 nor the Agreement on Safeguards (ASM) contain comparably detailed requirements as to the procedure to be followed when imposing safeguard measures. Article 3 ASM merely stipulates that a member may only apply a safeguard measure following an investigation by the competent authorities of that member pursuant to procedures previously established and made public in accordance with Article X GATT 1994. It further provides that importers, exporters and other interested parties must be given the opportunity to present evidence and their views on the matter. Lastly, Article 3.2 ASM holds that confidential information shall be treated as such. Accordingly, the corresponding provisions in Regulation (EU) 2015/478 on common rules for imports are less extensive and detailed than the provisions of the basic anti-dumping regulation or the basic anti-subsidy regulation.25 WTO law does not set out any procedural requirements with regard to the measures envisaged in the TBR. As it is the case in investigations carried out under the BADR and the BASR, the Commission shall make the initiation of an 22

Cf. Article 3.5 ADA and Article 15.5 ASCM. Cf. Article 12.1, 12.2 ADA and Article 22.1, 22.3 ASCM. 24 Cf. Article 12.1 subpara. 1 ADA and Article 12.2 subparas. 1–3 ADA and for the corresponding provisions in the ASCM of Article 22.2, 22.4, 22.5, 22.6 ASCM. 25 The requirements of the Agreement on Safeguards are mainly implemented through Article 4 (1) of Regulation (EU) 2015/478 (prescribing that an investigation procedure has to be carried out prior to the imposition of measures), Article 5 (5) of Regulation (EU) 2015/478 (right to be heard) and Article 8 of Regulation (EU) 2015/478 (confidentiality). 23

References

81

examination procedure public through a notice in the Official Journal. Moreover, the Commission must notify the representatives of the country or countries which are the subject of the procedure.26 Moreover, the Commission may carry out the necessary investigations to verify the information it has received.27 The complainants and the exporters and importers concerned and the representatives of the country or countries concerned may request access to information and ask to be informed of the main factual considerations underlying the procedure, Article 9 (4) TBR. Further, parties concerned may be heard by the Commission.28 Upon request, the Commission shall further give the parties concerned the opportunity to meet and to present their opposing views.29 In another parallel to proceedings under the BADR and the BASR, Article 9 (7) TBR provides for the use of facts available where there is a lack of cooperation by the parties to the proceedings. The protection of confidential information is provided for in Article 10 TBR. The scope of procedural rights awarded to individuals under the Enforcement Regulation is significantly more limited. Article 9 (3) to (5) of the Regulation ensures that the principle of confidentiality is observed. Apart from that, no provisions aimed at safeguarding individuals’ procedural rights are included in the Regulation. This can be explained by the fact that the role played by individuals in the politicized procedure leading to the withdrawal or suspension of trade commitments under the Enforcement Regulation is much more limited than it is the case under other trade defence procedures. In essence, their role is confined to providing the Commission with information and their view regarding the Union’s economic interests in specific goods or services or in specific sectors as prescribed by Article 9 (1) Enforcement Regulation.

References Academic Literature Fabricius (2014) Das Kontrollrecht von Rat und Parlament nach der KomitologieDurchführungsverordnung. Zeitschrift für europäisches Wirtschaftsrecht (EuZW) 2014 Gambardella (2011) Transparency in EU antidumping investigations. Glob Trade Cust J 6(3) Krajewski (2006) Die Gemeinsame Handelspolitik und das Primat der Gemeinsamen Außen- und Sicherheitspolitik im Verfassungsvertrag. In: Herrmann, Krenzler, Streinz (eds) Die Außenwirtschaftspolitik der Europäischen Union nach dem Verfassungsvertrag Kuplewatzky (2020) Balancing disclosure and access to documents in EU trade defence investigations. Glob Trade Cust J 15(8) Tietje (2009) Die Außenwirtschaftsverfassung der EU nach dem Vertrag von Lissabon. Beiträge zum Transnationalen Wirtschaftsrecht, Issue No. 83

26

Article (9) (1) (a), (b) of Regulation (EU) 2015/1843. Article 9 (2) of Regulation (EU) 2015/1843. 28 Article 9 (5) of Regulation (EU) 2015/1843. 29 Article 9 (6) of of Regulation (EU) 2015/1843. 27

Chapter 4

Judicial Review

4.1

Type of Proceedings

Furthermore, in addition to setting out the framework of the proceedings required for the imposition of trade defence measures, WTO law sets out fundamental requirements with regard to the judicial protection awarded in the area of trade defence. Given their practical relevance, the following section will focus on judicial review of acts by the EU institutions adopted during anti-dumping or anti-subsidy proceedings. The actual imposition of duties at customs is subject to the respective national law of the Member States. Article 13 ADA and Article 23 ASCM are of particular importance for the companies concerned, as they prescribe that members having anti-dumping or anti-subsidy legislation in place must also provide for judicial remedies or arbitration procedures in order to guarantee the independent review and control of the members’ authorities’ decisions.1 Companies cannot seek judicial review of trade defence measures imposed by WTO members at the WTO level itself. Rather, as mentioned, WTO dispute settlement proceedings can only be initiated by WTO members. The initiation of dispute settlement proceedings before the DSB is not dependent on the companies concerned having exhausted all legal remedies availed to them under Article 13 ADA or Article 23 ASCM (local remedies). The EU complies with the requirements set by Article 13 ADA and Article 23 ASCM, respectively, by providing for the judicial review of anti-dumping and anti-subsidy measures by means of an action for annulment before the Court of Justice of the European Union pursuant to Article 263 TFEU.2 As the measures are imposed in the form of implementing regulations (cf. Article 14 (1) BADR and

1

Comparing the different forms of judicial review and their effectiveness Vermulst and Horlick (2012), pp. 195–199. 2 Cf. further Moroni et al. (2020), pp. 919–942. © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 C. Herrmann, P. Trapp, EU Trade Defence Law and Practice, SpringerBriefs in Law, https://doi.org/10.1007/978-3-031-25330-0_4

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Article 24 (1) BASR), they can be challenged through this type of proceeding.3 Likewise, Commission decisions on the termination of proceedings, e.g. the rejection of a complaint regarding the initiation of an investigation, can be the subject of an action for annulment,4 as can be the rejection of a Commission proposal for the imposition of definitive anti-dumping measures by the Trade Defence Instruments Committee.5 Due to their practical relevance, actions for annulment in the context of EU trade defence action will be discussed in more detail below. As a consequence of the significant discretion accorded to the Commission in deciding whether or not the imposition of measures would be in the Union interest,6 the complainant industries or companies usually do not have a legal right to demand the imposition of trade defence measures. This also applies to measures taken under the Trade Barriers Regulation.7 Moreover, Article 265 TFEU prescribes that a direct action may be brought against the EU institutions, should one of them, in infringement of the Treaties, fail to act. For an action for failure to act to be admissible, the institution must first have been called upon to act.8 Until now, in the area of trade defence, only one action under Article 265 TFEU has been brought before the General Court.9 Moreover, any natural or legal person may choose to bring an action for damages under Article 268 TFEU and Article 340 (2), (3) TFEU. In order for the EU to incur non-contractual liability as a result of conduct of the Commission or the Council, the following three conditions must be fulfilled cumulatively: The respective EU institution’s conduct has to be unlawful; the complainant must have suffered actual damage; and a causal link between the conduct and the damage in question exists.10 With regard to actions for damages in the area of trade defence, it should once more be noted that the Commission enjoys significant discretion at each stage of the

3

Cf. further Vermulst and Rovetta (2012), pp. 240–247; Rovetta and Senduk (2010), pp. 1–13. European Court of Justice, judgment of 4 October 1983, case 191/82, ECLI:EU:C:1983:259, Fediol/I, paras. 25 et seq.; with regard to the termination of proceedings by the Council cf. European Court of Justice, judgment of 28 November 1989, case C-121/86, ECLI:EU:C:1989:596, Epicheiriseon, para. 8; but cf. also European Court of Justice, judgment of 30 September 1987, case C-229/86, ECLI:EU:C:1987:403, Brother Industries, denying the admissibility of the action due to the importer’s rights not being violated by the Council Decision terminating the proceedings. 5 European Court of Justice, judgment of 30 September 2003, case C-76/01 P, ECLI:EU:C:2003: 511, Eurocoton and Others v Council, paras. 69 et seq. 6 Cf. above p. 42. 7 However, the complainant industry can bring an action for annulment against a Commission decision refusing to initiate proceedings under the TBR, cf. Berrisch and Kamann (2016), para. 118. 8 Article 265 (2) TFEU. 9 General Court, judgment of 10 July 1997, case T-212/95, ECLI:EU:T:1997:107, Asociación de Fabricantes de Cemente de España. 10 Cf. e.g. General Court, judgment of 26 January 2006, case T-364/03, ECLI:EU:T:2006:28, Medici Grimm v Council, para. 59. 4

4.3

Standing Under Article 263 TFEU

85

investigation. Accordingly, non-contractual liability of the EU only arises where there is a sufficiently serious breach of a rule of law intended to confer rights on individuals. Due to the margin of discretion enjoyed by the Commission, a breach of the rule of law is only be considered to be “sufficiently serious” if the Commission has manifestly and gravely disregarded the limits of its discretion.11

4.2

Jurisdiction

First instance jurisdiction for actions for annulment against the adoption or non-adoption of trade defence measures lies exclusively with the General Court, even in cases where a Member State brings an action for annulment against an implementing regulation (Article 256 (1), Article 51 (a) (i) second indent of the statute of the Court of Justice of the EU).12 The same also applies with regard to actions for failure to act. This reflects—as do the rules on decision making—the predominantly administrative character of the imposition and application of the EU’s trade defence instruments. Similarly, as can be inferred from Article 256 (1) TFEU, jurisdiction for actions for damages also lies with the General Court.

4.3

Standing Under Article 263 TFEU

As just mentioned, trade defence measures are adopted in the form of implementing regulations. Pursuant to the second alternative of Article 263 (4) TFEU on actions for annulment by natural or legal persons, the right to bring an action against such a regulation is subject to the proviso that the act is of “direct and individual concern” to the complainant. Accordingly, in the area of trade defence instruments, the complainant has to show that he is directly and individually affected by the implementing regulation in question. The criterion of “individual concern” has been the subject of controversies in the past. According to the Plaumann jurisprudence of the ECJ, persons may claim to be individually concerned if the act in question affects them by reason of certain attributes which are peculiar to them or by reason of circumstances in which they are differentiated from all other persons, and by virtue of these factors distinguishes them individually in a degree comparable to them being the addressee

11

Cf. e.g. General Court, judgment of 23 September 2015, case T-205/14, ECLI:EU:T:2015:673, Schroeder v Council and Commission, para. 36; General Court, judgment of 26 January 2006, case T-364/03, ECLI:EU:T:2006:28, Medici Grimm v Council, paras. 79 et seq. 12 Berrisch and Kamann (2016), para. 11.

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of the legal act in question.13 Despite this formula having been criticised as unduly restrictive by the General Court,14 the EU Courts continues to interpret Article 263 (4) TFEU in accordance with the criteria first established in Plaumann.15 According to the established jurisprudence of the EU Courts in the area of trade defence law, the fact that a person or entity is involved in the procedure leading to the adoption of a contested measure does not suffice for the criterion of “individual concern” to be fulfilled. Conversely, individual concern exists where a provision of EU law requires, in order for an EU measure to be adopted, that a procedure be followed under which that person or entity may assert procedural rights, including the right to be heard, the particular legal position in which it finds itself being such as to distinguish it individually as required by Article 263 (4) TFEU.16 The applicant is directly concerned where the contested measure directly affects the applicant’s legal situation and leaves no discretion to the addressees who are entrusted with the task of implementing it.17 On the basis of the above, three different constellations of cases can be distinguished for which individual concern can be assumed to exist.18 First, in any event, the companies which are subjected to individual anti-dumping or anti-subsidy duties—i.e. exporters expressly named in the respective regulation—have standing.19 Second, related importers whose resale prices were used in determining export prices, as well as importers who have had commercial relationships with exporters located in third countries whose products are now subjected to anti-dumping or antisubsidy measures, are considered as being individually concerned and can hence bring an action for annulment.20 Lastly, other companies such as importers,

13

European Court of Justice, judgment of 15 July 1963, case 25/62, ECLI:EU:C:1963:17, Plaumann v Commission, ECR 1963, 213, 238. 14 General Court, judgment of 3 May 2002, case T-177/01, ECLI:EU:T:2002:112, Commission v Jégo Quéré, paras. 49 et seq. 15 European Court of Justice, judgment of 1 April 2004, case C-263/02 P, ECLI:EU:C:2004:210, Commission v Jégo Quéré, paras. 36 et seq.; European Court of Justice, judgment of 25 July 2002, case C-50/00 P, ECLI:EU:C:2002:462, Unión de pequeños agricultores, paras. 36 et seq. 16 General Court, judgment of 19 May 2021, case T-251/18, ECLI:EU:T:2021:278, China Chamber of Commerce for Import and Export of Machinery and Electronic Products, paras. 50 et seq. with further references. 17 European Court of Justice, judgment of 13 October 2011, C-463/10 P and C-475/10 P, ECLI:EU: C:2011:656, Deutsche Post and Germany v Commission, para. 66; also referenced in General Court, judgment of 19 May 2021, case T-251/18, ECLI:EU:T:2021:278, China Chamber of Commerce for Import and Export of Machinery and Electronic Products, paras. 72 et seq. 18 Berrisch and Kamann (2016), para. 23. 19 European Court of Justice, judgment of 21 February 1984, case 239/82, ECLI:EU:C:1984:68, Allied Corporation, para. 12; European Court of Justice, judgment of 7 May 1987, case 240/84, ECLI:EU:C:1987:202, Toyo Bearing II, para. 5. 20 Cf. e.g. European Court of Justice, judgment of 9 July 2020, case C-104/19, ECLI:EU:C:2020: 539, Donex Shipping v Staatssecretaris van Financiën, para. 46; European Court of Justice, judgment of 18 October 2018, case C-207/17, ECLI:EU:C:2018:840, Rotho Blaas Srl v Agenzia delle Dogane e dei Monopoli, para. 35; European Court of Justice, judgment of 17 March 2016,

4.3

Standing Under Article 263 TFEU

87

competitors or unnamed exporters are only thought to be individually concerned in exceptional circumstances distinguishing them from all other traders. This is for example the case where the economic activity of an importer is significantly affected by the implementing regulation in question.21 Furthermore, the complainant industry and its respective representative organization also has standing to challenge acts of the Commission in the context of antidumping and anti-subsidy proceedings.22 The Treaty of Lisbon gave rise to the assumption that these limited possibilities of individuals for bringing an action for annulment before the General Court would somewhat be extended by the insertion of a third alternative in Article 263 (4) TFEU. According to that provision, natural or legal persons may also institute proceedings against a regulatory act which is of direct concern to them and does not entail implementing measures. Under this alternative, the claimant does not have to be individually concerned by the measure in question. It follows that, in principle, under this provision, also exporters and importers of the goods subjected to antidumping or anti-subsidy measures who are not named in the respective implementing regulation can bring an action for annulment. Due to its ambiguous wording, the provision was subject to considerable controversy from the outset, in particular with regard to which legal acts exactly would qualify as “regulatory acts”.23 The debate was settled by the European Court of Justice, which clarified that the notion refers to acts of general application other than legislative acts within the meaning of Article 289 (3) TFEU.24 The implementing regulations in the area of trade defence instruments are adopted by the Commission, and are based on the provisions of the basic regulations. They thus meet the requirements of non-legislative acts of general application. case C-232/14, ECLI:EU:C:2016:180, Portmeirion Group UK Ltd v Commissioners for Her Majesty’s Revenue & Customs, para. 28. 21 Cf. e.g. General Court, judgment of 26 September 2000, case T-80/97, ECLI:EU:T:2000:216, Starway SA v Council, where the Court ruled that the applicant was individually concerned as it had participated in the investigation and its participation was mentioned in the regulation, and its business activities were seriously affected. Cf. further European Court of Justice, judgment of 16 May 1991, case C-358/89, ECLI:EU:C:1991:214, Extramet Industrie SA v Council. However, the facts in Extramet were very particular, so that no general inferences can be drawn from the Court’s jurisprudence in the matter. For a recent judgment on the standing of individual importers and trade associations under Article 263 (4) TFEU cf. General Court, judgment of 8 December 2022, case T-769/21, ECLI:EU:T:2022:768, Euranimi v Commission, paras. 58 et seq and paras. 101 et seq. 22 Cf. in detail of the standing of members of the complainant EU industry in an action for annulment directed against a Commission implementing regulation imposing anti-dumping duties European Court of Justice, judgment of 3 December 2020, case C-461/18 P, ECLI:EU:C:2020:979, Changmao Biochemical Engineering Co. Ltd v Council, paras. 54 et seq.; in detail on standing of the Union industry cf. Van Bael and Bellis (2019), § 8.58 [B]. 23 On the history of the notion cf. Herrmann (2011), p. 1352 et seq. (1353–1354). 24 European Court of Justice, judgment of 3 October 2013, case C-583/11 P, ECLI:EU:C:2013:625, Inuit Tapiriit Kanatami and Others v European Parliament and Council of the European Union, paras. 51, 61.

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Judicial Review

In addition, pursuant to Article 263 (4) TFEU, the act in question must not entail any implementing measure. Until now, this criterion has not received much attention in the jurisprudence of the EU Courts. It has however been established that implementing regulations imposing anti-dumping or anti-subsidy measures are generally not covered by the third alternative.25 Even though they define the measures to be taken in a very clear and precise manner, they require further implementation, as it is for the Member States’ customs authorities to ensure that the duties levied on the products are paid upon importation into the EU. This second requirement—the absence of implementing measures—is interpreted very strictly by the EU Courts. Therefore, any enforcement measure taken by the Member States following the adoption of the act in question prevents it from being qualified as a regulatory act which does not entail implementing measures within the meaning of Article 263 (4) TFEU.26 It must thus be concluded that despite the hopes initially raised by the introduction of a third alternative in Article 263 (4) TFEU, the Treaty of Lisbon ultimately failed to expand the scope for legal action against trade defence measures—there is no way around the requirement of “individual concern”. Lastly, as already indicated at multiple stages of this work, the Commission enjoys a significant degree of discretion at all stages of trade defence proceedings. Accordingly, judicial review of the Commission’s decisions by the Courts is usually limited to assessing whether relevant procedural rules have been complied with, whether the facts relied on have been accurately stated and whether there has been a manifest error in the appraisal of those facts or a misuse of powers.27

References Academic Literature Berrisch, Kamann (2016) In: Krenzler, Herrmann, Niestedt (eds) Rechtsschutz im EU-Außenwirtschaftsrecht Herrmann (2011) Individualschutz gegen Rechtsakte der EU “mit Verordnungscharakter” nach dem Vertrag von Lissabon. Zeue Zeitschrift für Verwaltungsrecht (NVwZ) 2011 Jinaru, Moroni, Willems (2019) Accountability in antidumping: the silent death of Lisbon. Glob Trade Cust J 14(6) Moroni, Natens, Willems (2020) Hurdles to litigating trade defence measures before EU courts. J World Trade 54(6) Rosenfeldt (2015) Das Erfordernis fehlender Durchführungsmaßnahmen. Zeitschrift für Europäisches Wirtschaftsrecht (EuZW) 2015

25 General Court, judgment of 5 February 2013, case T-551/11, ECLI:EU:T:2013:60, BSI v Council, paras. 53–54. 26 Cf. also Rosenfeldt (2015), p. 174 et seq. (179). 27 In detail on grounds for review under Article 263 TFEU cf. Van Bael and Bellis (2019), § 8.59. Criticising this lack of accountability particularly with regard to anti-dumping proceedings Jinaru et al. (2019), p. 268 et seq.

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Rovetta, Senduk (2010) Judicial protection in anti-dumping matters in the USA and in the EU. Glob Trade Cust J 5(1) Van Bael, Bellis (2019) EU anti-dumping and other trade defence instruments Vermulst, Horlick (2012) Judicial review of trade remedy determinations in ten user countries. Glob Trade Cust J 7(5) Vermulst, Rovetta (2012) Judicial review of antidumping determinations in the EU. Glob Trade Cust J 7(5)

Chapter 5

Perspectives and Current Developments

There hardly is another area of EU law that is affected more by the steady increase in cross-border economic integration and interactions, the hallmarks of globalization, than the law governing the use of the EU’s trade defence instruments. Global enterprises and corporations are characterized by their worldwide activity both in terms of research and development and production as well as marketing and sales. It becomes increasingly difficult to distinguish between EU and non-EU firms. As touched upon above, in the area of trade defence measures, this impacts the interpretation and application of various legal concepts employed during an investigation, most notably the concepts of “Union industry”1 and “Union interest”, but also on the application of rules of origin connected herewith.2

5.1

Reforms and Current Developments at the WTO Level

When debating possible avenues for reforming the law of trade defence instruments, one must always pay regard to the international trade law framework shaping their design and application, most importantly the agreements concluded under the auspices of the WTO. There was initial agreement to include the topic of trade defence in the negotiation mandate for the WTO Doha Round, with Article 28 of the Doha Declaration (which forms the mandate for the negotiations) stating: In the light of experience and of the increasing application of these instruments by members, we agree to negotiations aimed at clarifying and improving disciplines under the Agreements on Implementation of Article VI of the GATT 1994 and on Subsidies and Countervailing

1

Cf. above p. 36 et seq. and Tietje and Kluttig (2008), p. 89 et seq. On rules of origin in EU law cf. Rogiest et al. (2020), p. 127 et seq. Cf. further Isakson (2008), p. 109 et seq.

2

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 C. Herrmann, P. Trapp, EU Trade Defence Law and Practice, SpringerBriefs in Law, https://doi.org/10.1007/978-3-031-25330-0_5

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Measures, while preserving the basic concepts, principles and effectiveness of these Agreements and their instruments and objectives, and taking into account the needs of developing and least-developed participants.

However, the negotiations have proven to be extremely sluggish: launched in 2001, the Doha Round has failed to meet the set negotiation deadlines and has already been on the verge of being abandoned completely. At this point in time, most observers agree that the round is unlikely to yield any results, and must indeed be considered a failure.3 The negotiations on the subject of trade defence are taking place within the Negotiating Group on Rules, with the numbers of proposals made by the participating WTO members going into the hundreds. The most recent proposal by the Chairperson for Amendments to the ADA and the ASCM dates from December 20084 (sic!) and highlights the continued existence of disagreements between the members on numerous issues:5 already with regard to the very basic question of whether the amendments should facilitate or curb the use of trade defence instruments, the members’ positions diverge substantially. Furthermore, the additional need for reform resulting from the increasing use of trade defence instruments against non-market economies must be taken into consideration in order to stay abreast of the de facto changes WTO law has undergone over the last years. While WTO anti-dumping law contains provisions detailing how duties in proceedings against non-market economies are calculated,6 anti-subsidy law is silent in this regard.7 The Bali Package8 of 2013 and the Nairobi Package9 of 2015 provided some much-needed stimulus such as the conclusion of the WTO

3

For the EU’s ideas on reform of the WTO cf. the 2018 concept paper published on the website of DG Trade, available at https://trade.ec.europa.eu/doclib/docs/2018/september/tradoc_157331.pdf. 4 WTO, Negotiating Group on Subsidies: New Draft Consolidated Chair Texts of the AD and SCM Agreements of 19 December 2008, TN/RL/W/236. Cf. also Negotiating Group on Rules: Communication from the Chairman of 21 April 2011, TN/RL/W/254. In 2017, the People’s Republic of China published a paper (TN/RL/GEN/194) on special consideration and treatment of small and medium-sized enterprises in anti-dumping and countervailing proceedings. However, the proposal was met with reluctance by other WTO members, with the USA stating categorically that they were not prepared to engage in negotiations on the issue of trade remedies. 5 On the proposal cf. Newman (2011); Kazeki (2010), p. 931. On the previous proposals cf. Brink (2008), p. 371 et seq.; Hindley (2008), p. 231 et seq. 6 Art. 2.2 and 2.7 ADA and Art. VI:1 GATT 1994. 7 The application of WTO anti-subsidy law against products originating in non-market economy countries is based on the interpretation of Article 14 (b) and (d) ASCM offered by the Appellate Body in US – Softwood Lumber IV, WT/DS257/AB/R, 19 January 2004 and US — Anti-Dumping and Countervailing Duties (China), WT/DS379/AB/R, 11 March 2011, cf. Müller (2016), p. 867 et seq. On countervailing measures against Chinese products following the elapse of the deadline contained in Article 15 lit. d) of the Chinese Protocol of Accession to the WTO Bungenberg and van Vaerenbergh (2020), p. 749 et seq. 8 WTO, Bali Ministerial Declaration of 11 December 2013, WT/MIN(13)/DEC. 9 WTO, Nairobi Ministerial Declaration of 19 December 2015, WT/MIN(15)/DEC.

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Reforms and Current Developments at the WTO Level

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Trade Facilitation Agreement,10 raising hopes of the Doha Round negotiations progressing further. However, in view of the deadlocked negotiating positions of the members, the negotiations are unlikely to yield any tangible outcomes in the foreseeable future. Most importantly, the Bali Package as well as the Nairobi Package did not touch upon the subject of trade defence. The twelves ministerial conference of the WTO in 2022 did not yield any outcomes relevant for the field of trade defence. Low levels of compliance with notification requirements by the WTO members inter alia under the ASCM are among the reasons why the ASCM is considered to be of little efficacy in addressing the market-distorting effects of subsidies. Accordingly, in April 2019, the EU, together with eight other WTO members, proposed the introduction of Procedures to enhance transparency and strengthen notification requirements under WTO Agreements.11 The proposal is currently being discussed.12 Similarly, it cannot be assumed that current issues such as the ambiguities surrounding China’s market economy status in anti-dumping proceedings, which arise from conflicting interpretations of China’s Protocol of Accession to the WTO,13 will be resolved in a uniform manner through amendments to the relevant WTO legislation. Given the continued dysfunctionality of the WTO Appellate Body, it remains equally unclear whether proceedings initiated before the DSB will be able to provide clarification on this as well as other crucial issues of WTO trade defence law, among these the WTO compatibility of the “new methodology” for calculating normal value introduced by means of Regulation (EU) 2017/2321. It cannot be excluded that other WTO members might challenge the EU’s reformed antidumping legislation before the DSB at some point—indeed, as mentioned above, China already initiated proceedings on the matter in 2019.14

10

WTO, Trade Facilitation Agreement of 11 December 2013, WT/L/911. WTO, General Council: Procedures to enhance transparency and strengthen notification requirements under WTO agreements of 11 April 2019, JOB/CTG/14/Rev.1, available at https://docs.wto. org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/Jobs/GC/204R1.pdf&Open=True. 12 Cf. e.g. the amendments made to the original proposal in July 2021, JOB/GC/204/Rev.6, JOB/CTG/14/Rev.6, available at https://web.wtocenter.org.tw/DownFile.aspx?pid=359249& fileNo=0. 13 Cf. above p. 31. On the situation under WTO law cf. Kleimann, EUI Working Paper RSCAS 2016/37, The Vulnerability of EU Anti-Dumping Measures against China after December 11, 2016, available at https://cadmus.eui.eu/bitstream/handle/1814/42546/RSCAS_2016-37.pdf? sequence=1. 14 Cf. above p. 31. 11

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5.2 5.2.1

5

Perspectives and Current Developments

Reforms and Current Development at the EU Level New Instrument on Foreign Subsidies

The new regulation on foreign subsidies distorting the internal market is another development in the EU which is likely to have a considerable impact on EU trade defence practice.15 The new instrument, which entered into force at the end of 2022 and which will start to apply mid-2023, addresses a “blind spot” within the EU’s legal framework: EU State aid rules only apply to subsidies granted by EU Member States, and not by third States.16 In order for the BASR to apply, the subsidisation must concern (i) a product, which is (ii) imported into the European Union. Thus, subsidies within the services sector are never caught, nor are subsidies by third States regarding a company’s investments or acquisitions in firms located within the EU, or bids in public procurement procedures. Neither can subsidies granted by third States to companies located within the EU be addressed through the BASR. While the EU has tightened its rules on the control of foreign direct investment (FDI) through the adoption of a regulation establishing a framework for the screening of FDI into the EU,17 the regulation only addresses public policy and security concerns. Moreover, even though it is relevant whether an investment is facilitated by subsidies is relevant for the assessment under the above-mentioned regulation, not all Member States operate an FDI screening system. Furthermore, the ultimate regulatory decision on the investment is taken at Member State level, which makes a coherent EU-level approach at the EU level to foreign subsidies significantly more difficult. The above has led the Commission to conclude that another, new instrument addressing the distortions to competition on the internal market brought about by foreign subsidies is necessary. In May 2021, the Commission presented a legislative proposal in the form of a regulation on the subject matter.18 The new regulation on foreign subsidies distorting the internal market (FSR) contains three instruments: – One instrument enabling the Commission to conduct ex officio reviews of foreign subsidies; – one instrument enabling the Commission to assess possible distortions to competition arising as a result of foreign subsidies in the context of concentrations; and – one instrument enabling the Commission to take account of possible distortions in public procurement procedures resulting from foreign subsidies. 15

Regulation (EU) 2022/2560 of the European Parliament and of the Council of 14 December 2022 on foreign subsidies distorting the internal market, OJ EU 2022 L 330/1 (“FSR”). 16 Schwab (2016), para. 17. 17 Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investments into the Union, OJ EU 2019 L 79/1. 18 European Commission, Proposal for a Regulation of the European Parliament and of the Council on foreign subsidies distorting the internal market, 5 May 2021, COM(2021) 223 final.

5.2

Reforms and Current Development at the EU Level

95

Under the instruments concerning the assessment of concentrations and of bids in public procurement procedures, the provisions’ addressees (i.e. the acquirer or the merging parties or the bidder, respectively) have to notify the Commission of any financial contribution received by a non-EU Member State which meets the thresholds as set out in the proposed regulation.19 The concentration may only be implemented, or the bidder be awarded the contract, where the Commission’s review does not come to a negative conclusion. Even if the thresholds for notification of the instruments on public procurement procedures or the control of concentrations are not met, the third component of the new instrument provides for an ex officio investigative tool for all other market situations as well as concentrations and public procurement procedures below the above-mentioned thresholds.20 Owing to the regulation’s close connection both to matters of the internal market and aspects of commercial policy, the new instrument is be based on Article 207 TFEU as well as Article 114 TFEU.21 The close connection between the proposed new instrument and EU trade policy is evident in the Commission proposal, with some rules—i.e. Art. 14 (3) FSR on the consequences of a lack of cooperation during the proceedings—drawing on the Commission’s experience from investigations in the international trade context. As a common feature to all three instruments, the text of the FSR provides for a balancing test to be carried out by the Commission in its assessment of the competition-distorting effects of foreign subsidies. Pursuant to Article 6 FSR, the Commission shall balance the distortion on the internal market caused by the subsidy with its positive effects on the development of the relevant economic activity on the internal market, while considering other positive effects of the foreign subsidy such as broader positive effects in relation to the relevant policy objectives, in particular those of the Union. The outcome of this balancing exercise is to be taken into account by the Commission when deciding whether to adopt measures under the new instrument. Such a balancing exercise also forms part of the Commission’s assessment concerning the compatibility of State aid granted by a Member State with EU State aid rules.22 Likewise, when deciding on the imposition of countervailing measures under the BASR, the Commission assesses whether this is in the Union’s interest.23 Accordingly, as such, the inclusion of a balancing test in the proposed regulation shows that, in line with the EU’s other rules on subsidies (be they granted

19

Concerning the notification of concentrations, the turnover of the EU target must exceed EUR 500 million, and the foreign financial contribution be above EUR 50 million, Article 20 FSR. Concerning the prior notification of foreign subsidies in the context of public procurement procedures, the estimated value of the public procurement is equal or greater than EUR 250 million, Article 28 (1) FSR. 20 European Commission, Proposal for a Regulation of the European Parliament and of the Council on foreign subsidies distorting the internal market, 5 May 2021, COM(2021) 223 final, p. 10. 21 European Commission, Proposal for a Regulation of the European Parliament and of the Council on foreign subsidies distorting the market, 5 May 2021, COM(2021) 223 final, p. 6. 22 Article 107 (3) TFEU. 23 Article 31 BASR and cf. above p. 41 et seq.

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by EU Member States or third States), the possible positive effects of a subsidy are to be taken into account in the Commission’s decision-making process. However, in a central difference to the other sets of rules just mentioned, the balancing test of Article 6 FSR is remarkably imprecise. Article 6 does not contain any guidance as to which positive aspects may be taken into consideration by the Commission in deciding whether to adopt measures under the new instrument or not. It could be argued that, due to the central notion of “subsidy” being defined in accordance with the EU’s State aid rules, the balancing test should also be carried out along the same lines as in EU State aid law. This would go beyond an assessment of the economic effects the (non-)imposition of measures would entail for the various market operators in the European Union—as it is the case under EU trade defence law. Instead, if the Commission were to adopt an approach similar to that under EU State aid law, the focus would lie on aspects such as the contribution of the subsidy to the development of certain economic activities24 or whether it promotes the execution of projects of common European interest.25 Due to the cross-sector nature of the new instruments, overlaps with other Union policies exist. This includes EU trade policy and, accordingly, the EU’s trade defence instruments. The Commission is of the view that the FSR is coherent with EU trade policy and complements the existing trade instruments. In particular, the Commission considers the FSR to complement its existing rules on subsidies granted by third States since they, as outlined above, do not address subsidies granted in the services sector or injury which is not caused by goods that are imported into the European Union, but which are produced by firms already located within the internal market. It remains to be seen whether the EU’s trade defence instruments and the new instrument indeed are complementary, or whether there are not overlapping areas of application. While the answer to this question depends on the exact scope and content of the new instrument, it should be noted that the Commission’s view regarding the non-existence of overlaps cannot be fully assented to: where a joint venture or the acquisition of an undertaking is facilitated by foreign subsidies, the concentration will be assessed under the rules of the FSR.26 Where, as the result of such a transaction, an EU undertaking is now controlled by a non-EU undertaking, it may now itself become an addressee of countervailing measures adopted under the BASR or the BADR.27 Accordingly, the same subsidization would be relevant both under EU trade defence rules and under the new instrument.

24

Article 107 (3) lit. c) TFEU. Article 107 (3) lit. b) TFEU. 26 Articles 17 to 25 Commission Proposal. 27 Cf. Article 4 (1) (a) BADR and Article 9 (1) (a) BASR, providing that when producers are related to the exporters or importers of the allegedly dumped or subsidized product respectively, the term “Union industry” may be interpreted as referring to the rest of the producers. Cf. further Van Bael and Bellis (2019), § 4.05 [A]. 25

5.2

Reforms and Current Development at the EU Level

5.2.2

97

Brexit and Trade Defence

The withdrawal of the United Kingdom (UK) from the European Union (“Brexit”), which became effective on 1 January 2020, likewise will have a significant impact in the area of trade defence. At the outset, it should be noted that the UK is precluded from simply continuing to apply existing EU trade defence measures following Brexit, as EU law will no longer be applicable in the UK after its withdrawal from the Union. Article 1 ADA only permits the imposition of duties “pursuant to investigations initiated and conducted in accordance with the provisions of this Agreement”. As it was the EU authorities—and not the UK—that conducted the investigations, a decision by the UK authorities to simply continue to levy the existing anti-dumping or anti-subsidy duties in all probability would have amounted to a violation of WTO law.28 In order to prevent a lacuna as regards the protection of UK companies against unfair trade measures, accordingly, the UK government has passed its own trade defence legislation29 and has set up a new public body responsible for managing trade defence after Brexit, the so-called “Trade Remedies Authority”. As the UK requested to be treated as a member during the transition period,30 which ended on 31 December 2020, the new body only started applying UK trade defence law in January 2021.31 The UK has chosen to apply the “lesser duty rule” in its anti-dumping and anti-subsidy investigations.32 In another parallel to the relevant EU legislation, the UK will likewise carry out a public interest test before deciding on the imposition of measures under its trade defence legislation.33 Similarly, the EU is precluded from simply maintaining existing measures after Brexit in cases where market data of the UK were included in the determination of dumping and/or injury. An interim review will then have to be initiated (Article 11 (3) BADR and Article 19 BASR), whereupon existing measures may be adjusted if necessary.34 In a similar vein, the withdrawal of the UK from the European Union

28

Cf. Bickel (2021b), p. 5 et seq.; Bickel (2021a). The Trade Remedies (Dumping and Subsidisation) (EU Exit) Regulation 2019, (Statutory Instruments 2019 No. 450), available at https://www.legislation.gov.uk/uksi/2019/450/contents/ made. 30 During the transition period, EU trade defence measures continued to apply to imports into the UK, cf. Article 127 (1), (3) of the Agreement on the Withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community of 19 October 2019, OJ EU 2019 CI 384/1. 31 Cf. Institute for Government, Trade Defence after Brexit, available at https://www. instituteforgovernment.org.uk/printpdf/4419. 32 Part 5, § 36 (Determination of an adequate amount to remove the injury) of the Trade Remedies (Dumping and Subsidisation) (EU Exit) Regulation 2019. 33 Under the UK legislation, this is referred to as the “economic interest test”. 34 Cf. also the Notice regarding the application of anti-dumping and anti-subsidy measures in force in the Union following the withdrawal of the United Kingdom and the possibility of a review (2021/ C 18/11) published on 18 January 2021, OJ EU 2021 C 18/41 and Bickel (2021b), p. 1 et seq. 29

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has in some instances necessitated a revision of data, in particular macroeconomic indicators, during the injury assessment where the period chosen for the injury assessment extents to years where the United Kingdom was still a Member State of the European Union.35 Finally, in theory, it is possible for the EU to impose trade defence measures against imports originating in the UK36—a possibility explicitly mentioned in the EU-UK Trade and Cooperation Agreement (TCA) concluded at the end of December 2020.37 This is of particular relevance with regard to the imposition of anti-subsidy measures, as the UK is no longer bound by the EU’s rules on State aid and can autonomously decide on the granting of subsidies.38 Indeed, the rules on subsidies were among the most controversial issues in the negotiations leading to the conclusion of the EU-UK TCA. The TCA chapter on subsidy control lays out detailed rules on subsidy control, with the objective of preventing distortions to trade or investment between the parties to the agreement.39 The TCA permits the parties to impose remedial measures where the other party to the agreement grants subsidies which cause, or are at the serious risk of causing, a significant negative effect on trade or investment between the members. However, such remedial measures may only be imposed in accordance with the procedure and the substantive requirements as set out in the TCA.40 Disputes between the parties concerning the TCA chapter on subsidy control are subjected to the dispute settlement mechanisms as established in the Agreement.41 It should further be noted that the TCA permits either party to take appropriate rebalancing measures where material impacts on trade or investments between the parties are arising as a result of significant divergences between the parties in the areas of labour and social, environmental or climate protection, or with respect to subsidy control.42 Such measures may only be imposed where consultations with the other party have yielded no acceptable outcome. Further, where the other party requests the establishment of an arbitration tribunal after the consultations have been completed, rebalancing measures may only

35

Cf. e.g. Commission Implementing Regulation (EU) 2021/546 of 29 March 2021 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of aluminium extrusions originating in the People’s Republic of China, OJ EU 2021 L 109/1, recitals 197 et seq. (injury based on EU-28 data) and recitals 255 et seq. (injury based on EU-27 data). 36 Naturally, the same would also be possible for the UK with regard to EU imports. 37 Trade and Cooperation Agreement between the European Union and the European Atomic Energy Community, of the one part, and the United Kingdom of Great Britain and Northern Ireland, of the other part, OJ EU 2020 L 444/14, Article GOODS.17: Trade Remedies. 38 Cf. European Parliament Research Service Briefing, The Consequences of Brexit for the Customs Union and the Internal Market Acquis for Goods, p. 6, available at: . 39 Title XI: Level playing field for open and fair competition and sustainable development, chapter 3: Subsidy control. 40 Title XI, chapter 3: subsidy control, Article 3.12: Remedial measures. 41 Title XI, chapter 3: subsidy control, Article 3.13: Dispute settlement. 42 Title XI, chapter 9: Horizontal and institutional provisions, Article 9.4: Rebalancing.

References

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be imposed after the arbitration tribunal has found the rebalancing measures to be consistent with the requirements set out in the TCA.43

References Academic Literature Bickel (2021a) Customs unions in the WTO – problems with anti-dumping Bickel (2021b) Brexit and trade defence: effects of a changed territory. J Int Econ Law 24(1) Brink (2008) Amendments to the anti-dumping agreement: the chairman’s dinner. Glob Trade Cust J 3(11/12) Bungenberg, van Vaerenbergh (2020) Countervailing measures and China’s accession protocol to the WTO. J World Trade 54(5) Hindley (2008) The Draft Doha Round Anti-Dumping Agreement. Glob Trade Cust J 3(7/8) Isakson (2008) When anti-dumping meets globalization: how anti-dumping can damage the supply chains of globalized European companies. Glob Trade Cust J 3(3) Kazeki (2010) Anti-dumping negotiations under the WTO and FANs. J World Trade 44(5) Müller (2016) Mapping the aftermath of accession: which is China’s applicable world trade organization anti-subsidy law for the use of alternative benchmarks? J World Trade 50(5) Newman (2011) Where the EU anti-dumping system continues to fail on issues relating to transparency and predictability. Glob Trade Cust J 6(2) Rogiest, Rovetta, Smiatacz, Vermulst (2020) Rules of origin in the EU, a simplification? Glob Trade Cust J 15(3/4) Schwab (2016) Art. 107 TFEU. In: Säcker, Montag (eds) European State Aid Law (2016) Tietje, Kluttig (2008) The definition of community industry in EU antidumping law. Glob Trade Cust J 3(3) Van Bael, Bellis (2019) EU anti-dumping and other trade defence instruments

43

Title XI, chapter 9: Horizontal and institutional provisions, Article 9.4 (3): Rebalancing.

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International Agreements World Trade Organization Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994: Marrakesh Agreement Establishing the World Trade Organization, Annex 1A (1868 U.N.T.S. 201). Agreement on Subsidies and Countervailing Measures: Marrakesh Agreement Establishing the World Trade Organization, Annex 1A (1869 U.N.T.S. 14). Agreement on Interpretation and Application of Articles VI, XVI and XXIII of the General Agreement on Tariffs and Trade, OJ (EC) 1980 L 71/72. Agreement on Safeguards, OJ EC 1994 L 336/184. Protocol on the Accession of the People’s Republic of China (WT/L/432) (23 November 2001).

European Union Free Trade Agreement between the European Union and the Republic of Singapore, 14 November 2019, OJ EU 2019 L 294/3. Agreement on the Withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community of 19 October 2019, OJ EU 2019 CI 384/1. Trade and Cooperation Agreement between the European Union and the European Atomic Energy Community, of the one part, and the United Kingdom of Great Britain and Northern Ireland, of the other part, OJ EU 2020 L 444/14.

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Miscellaneous World Trade Organization, Negotiating Group on Subsidies: New Draft Consolidated Chair Texts of the AD and SCM Agreements of 19 December 2008, TN/RL/W/236. World Trade Organization, Negotiating Group on Rules: Communication from the Chairman of 21 April 2011, TN/RL/W/25. World Trade Organization, Bali Ministerial Declaration of 11 December 2013, WT/MIN(13)/DEC. World Trade Organization, Trade Facilitation Agreement of 11 December 2013, WT/L/911. World Trade Organization, Nairobi Ministerial Declaration of 19 December 2015, WT/MIN(15)/DEC. World Trade Organization, General Council: Procedures to enhance transparency and strengthen notification requirements under WTO agreements of 11 April 2019, JOB/CTG/14/Rev.1. World Trade Organization, World Trade Statistical Review 2019, available at . World Trade Organization, Statement on a Mechanism for Developing, Documenting and Sharing Practices and Procedures in the Conduct of WTO Disputes (JOB/DSB/1/Add.12), 30 April 2020, available at https://trade.ec. europa.eu/doclib/docs/2020/april/tradoc_158731.pdf. World Trade Organization, General Council: Procedures to enhance transparency and strengthen notification requirements under WTO agreements, Revision of 15 July 2021, JOB/GC/204/Rev.6, JOB/CTG/14/Rev.6, available at https://web. wtocenter.org.tw/DownFile.aspx?pid=359249&fileNo=0.

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