Tackling Unfair Trade: New Anti-dumping Rules for the EU

Zollgrenze © Calado/Fotalia

The EU has agreed to new rules for anti-dumping procedures. After already having been approved by the Council in October 2017, the amending Regulation (EU) 2016/1036 – which revises the anti-dumping regulation – passed the last hurdle in mid-November when the European Parliament voted in its favour. The aim of these amendments is to ensure that EU procedures correspond to the law of the World Trade Organization (WTO).

The reform initiative was triggered by a transitional period stipulated in China’s WTO Accession Protocol having run out on December 11, 2016. Article 15, titled “Price Comparability in Determining Subsidies and Dumping”, focuses on the methodology for calculating the normal value in anti-dumping investigations. In accordance with Article 15, Paragraph (a)(ii), a WTO member involved in an anti-dumping investigation against China can use a methodology not based on Chinese domestic prices and costs if market economy conditions cannot be shown to have prevailed. In such a case, instead of Chinese domestic prices and costs, the prices and costs of an analogue country can be used to determine the normal value. Today, this sub-paragraph is no longer valid (the remainder of the article, including the chapeau, continues to apply). Many legal experts concluded that in future, WTO members involved in anti-dumping procedures against China would no longer be able to use comparative price calculations. For the EU, this meant that the anti-dumping basic Regulation had to be amended.

What has changed vis-à-vis the old anti-dumping regulation?

  • The list of non-market economies is entirely deleted from the anti-dumping regulation. Therefore, distinctions will no longer be made between market economies and non-market economies.
  • Instead, alternative calculation methodologies (third-country prices) are to be used in anti-dumping procedures if significant market distortions resulting from state interference can be shown to exist in individual countries or sectors.
  • In principle, EU companies must prove that production in the European market has been unfairly impaired by cheap imports from third countries. But the amending regulation ensures that the distribution of the burden of proof in anti-dumping procedures is not skewed to the disadvantage of EU companies. Moreover, it spells out the reporting requirements. From now on, the European Commission is to report regularly on the market economy conditions in third countries and in individual industrial sectors.
  • Transitional periods are intended to ensure that existing anti-dumping measures and ongoing anti-dumping procedures remain valid after the entry into force of the new regulations (so-called grandfathering).

The BDI welcomes the adoption of the amending regulation because it en-sures that companies will continue in the future to have effective instruments at their disposal to protect themselves against unfair trade through dumping.

What is problematic, however, is that from now on, lower wage and environmental standards are to be taken into account in calculating anti-dumping duties. Sustainability standards are important and an indispensable part of EU trade policy. For its part, the BDI also promotes more sustainability – for example in new free trade agreements. The new standards must not pave the way for protectionism, however.

In December 2016, China filed a complaint with the WTO against the old anti-dumping Regulation of the EU. Since negotiations between the EU and China did not lead to a solution, a WTO dispute settlement panel is dealing with the case. It remains unclear right now if China intends to file a complaint against the new anti-dumping regulation as well. The new EU regulation will enter into force as soon as it has been published in the Official Journal of the European Union. This is likely to take place later in December 2017.