New antidumping rules to defend EU growth

"La lettre B" l'essentiel de l'actualité économique et financière européenne décryptée

New antidumping rules to defend EU growth

The EU has called upon Member States to support its efforts to strengthen current trade defence instruments. Despite the fact that the Commission has been using the available legislation to its full extent, it now seems insufficient to deal with the huge overcapacities that result in dumped exports on the EU market.

A modernisation of trade defence can be achieved through the swift adoption of the proposal tabled in 2013, President Juncker underlined in a recent speech. According to the Head of the Commission:

“Trade is essential for our economic growth and jobs creation, but we should not be naïve. Our current rules are proving insufficient to combat the harm from unfair foreign competition. The EU’s trade defence rules require an urgent update. The Commission has been doing its part, it’s now high time for Member States to make the necessary decisions and equip the Commission with instruments fit to deal with the current realities of the international trading environment.”

Jyrki Katainen added that:

“Trade policy is one of the biggest assets of the EU to provide jobs, growth, and investment. 30 million jobs are directly related to our exports. This has increased by two thirds during the past 15 years. Our prosperity and welfare depend on trade. Free trade must be fair, and only fair trade can be free.”

In a dedicated Communication entitled ’Towards a robust trade policy for the EU in the interest of jobs and growth’, the Commission outlined how a new anti-dumping methodology which the Commission intends to propose would be used to address situations where market conditions do not prevail, while dealing with forthcoming changes to the legal framework of the World Trade Organisation (WTO).

The adoption of these changes – while respecting WTO rules – shall allow the EU to impose higher antidumping duties in some instances, for example where there are massive production overcapacities in exporting countries. Furthermore the new envisaged anti-dumping methodology would allow the EU to capture market distortions linked to state intervention in third countries that mask the true extent of dumping practices.

The Commission believes that due to the systematic application of the so called Lesser Duty Rule (LDR), current EU legislation hampers its efforts to address the challenges facing industries – such as the steel sector – which are suffering as a result of huge increases in import volume of dumped products.

To impose anti-dumping measures, there needs to be proven dumping from a third country and proven injury for EU industry with a causal link between them. The level of anti-dumping duties is then imposed at the level of the dumping margin or the level that removes injury, whichever is lower (the ’lesser duty’). In practical terms, this means that on comparable dumped products originating from China, like certain cold rolled flat steel products, the average EU anti-dumping duty was 21,1%, while in the US, where the LDR is not applied, the average anti-dumping duty was 265,8%.

The new anti-dumping methodology, will not grant ’market economy status’ to any country but ensure that the EU’s trade defence instruments are adapted to face the new challenges and legal and economic realities, while maintaining an equivalent level of protection.

The implementation of this new methodology would include a transition period during which all existing anti-dumping and antisubsidy measures would remain subject to the existing legislation, and ongoing investigations would not be affected. The Commission will also propose a further strengthening of the EU antisubsidy legislation so that in future cases, any new subsidies revealed in the course of an investigation can also be investigated and included in the final duties imposed.

A proposal should be tabled before the end of the year.

Lorenzo Scattini