G/ADP/Q1/EU/10  
G/SCM/Q1/EU/10  
 
9 October 2018  
(18-6222) Page: 1/3 
Committee on Anti -Dumping Practices  
Committee on Subsidies and Countervailing Measures  Original: English  
 
NOTIFICATION OF LAWS AND REGULATIONS UNDER  
ARTICLES 18.5 AND 32.6 OF THE AGREEMENTS  
REPLIES TO QUESTIONS1 FROM MEXICO REGARDING THE  
NOTIFICATION OF THE EUROPEAN UNION2 
The following communication, dated 8 October  2018, is being circulated at the request of the 
delegation of the European Union . 
 
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Question 1  
The European Union mentions a number of elements the impact of which should be taken 
into account when assessing the existence of significant d istortions. These elements 
include the market in question being to a significant extent served by enterprises that 
operate under the ownership, control or policy supervision or guidance of the authorities 
of the exporting country; and state presence in fir ms allowing the state to interfere with 
respect to prices or costs.  
In this regard, we would be grateful if the European Union could clarify the following 
points:  
(a) Are there any criteria for determining when one or more enterprises can be 
considered to operate under the control or policy supervision or guidance of the 
authorities of the exporting country?  
(b) Are there any criteria for determining when a market can be considered to be to a 
significant extent served by these enterprises?  
Reply  
The purpose  of the amended legislation is to ensure that dumping calculations are based on a reliable 
normal value which reflects normal market conditions. The prices or costs used for the calculation 
of normal value must not be distorted by reason of state interfere nce in the economy. One of the 
elements, from a non -exhaustive list, which will be considered in this assessment, is the extent to 
which the market in question is being served to a significant extent by enterprises which operate 
under the ownership, contro l or policy supervision or guidance of the authorities of the exporting 
country.  This is only one of the elements which may be taken into account in assessing the extent 
of significa nt distortions in an economy. Given that the facts underlying each and every case may 
be different both in terms of the nature and degree of distortions, it is not appropriate, or useful, to 
quantify a threshold for the impact of any one of the elements described in Art. 2(6a )(b) on an 
individual basis.  
                                                
1 G/ADP/Q1/EU/5 - G/SCM/Q1/EU/5 . 
2 G/ADP/N/1/EU/3/Suppl.2 -G/SCM/N/1/EU/2/Suppl.2.  G/ADP/Q1/EU/10 • G/SCM/Q1/EU/10  
 
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  It is only when all th e elements taken together reach a magnitude sufficiently great that domestic 
prices and costs will be considered inappropriate for establishing the normal value.  
Question 2  
Paragraph 6a. (b) establishes a list of elements for determining when distortions m ay be 
considered significant. Could the European Union please clarify whether it is obligatory to 
examine each and every one of the elements on the list in order to make such a 
determination?  
Reply  
Under Article 2(6a)(b) the list of elements which could b e considered in order to determine whether 
or not significant distortions exist in an economy is non -exhaustive.  Therefore other elements may 
be taken into account.  The specific circumstances of each case will determine which elements will 
be addressed in examining whether or not significant distortions exist. The legislation states that 
'regard shall be had, inter alia, to the potential impact of one or more of the following elements: 
'(emphasis added).  What is relevant will vary in the context of each and  every case.  
Question 3  
Regarding the report referred to in paragraph 6a . (c), it is Mexico's understanding that 
the interested parties have the right to comment on this report during the investigation. 
Nevertheless, could the European Union please clarify  whether this right also applies 
during the report preparation process?  
Reply  
It is not the existence of the reports but the fact that domestic prices or costs cannot be used for 
the calculation of normal value, due to distortions affecting prices and costs, which triggers the 
application of the new rules. Therefore, the reports are one possible source of information which 
may be considered in investigating the existence of distort ions in the country concerned. Other 
evidence regarding the existence and  impact of distortions that comes to light in the context of the 
initiation of a case or the subsequent investigation will also be taken into account, if relevant.  
The reports take the form of European Commission Staff working documents, meaning that they  are 
of a technical nature.  When it comes to drafting these reports, the legislator did not provide for the 
possibility of consulting outside stakeholders. One of the reasons for this is that, in fact there is no 
need for consulting stakeholders. The repor t does not have any separate and self -standing legal 
value – determinations on distortions affecting prices and costs will only be made in the context of 
a specific anti -dumping investigation where they have been invoked.  
The reports set out the factual ci rcumstances prevailing in a given country. In order to ensure that 
the reports are unbiased they are based on primary sources of information such as legislation, plans, 
policy documents etc. from which ever country is under review. This information is in tu rn 
supplemented with data and studies from reputed international institutions, e.g. OECD, World Bank 
etc.  
The reports will be placed on the file of any case for which this is pertinent, and will become  part of 
the relevant evidence in the investigation.  As is the case with any evidence in an anti -dumping 
investigation on which findings are based, interested parties may consult the information, provide 
comments, submit rebuttals or any additional material and information which may be relevant in the 
context  of exercising their rights. The decision will then be based on the totality of the evidence.  
Question 4  
According to paragraph 6a. (e), where the Commission finds that there is sufficient 
evidence of significant distortions, it may initiate an investigati on on that basis. Could the 
European Union please clarify whether this implies that anti -dumping investigations may 
be initiated on the basis solely of the existence of significant distortions?  G/ADP/Q1/EU/10 • G/SCM/Q1/EU/10  
 
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  Reply  
 
The EU's Basic Anti -dumping  Regulation provides for a number of conditions which must be met for 
an anti -dumping investigation to be initiated. These are in line the WTO Agreement.  In accordance 
with this legislation, investigations will be initiated when the European Commission is satisfied that 
it has sufficient evidence supporting alle gations of injurious dumping. These conditions are not 
affected by the amendments under review today. The existence or absence of a report is irrelevant 
to the assessment of whether an anti -dumping i nvestigation should be initiated. The reports 
contemplated in the new legislation constitute only collections of factual information which may be 
considered relevant in any given investigation to assess the existence of significant distortions and 
hence th e dumping calculation method which may be applied. Thus, the documentation contained 
in the Commission report(s) foreseen under Art. 2(6a)(c) of the Regulation is not a reason to initiate 
an anti -dumping investigation. Recital 4 simply refers to the possib ility of producing  reports  on 
countries or sectors in relation to which an anti -dumping investigation might potentially be initiated. 
The choice of country on which a report may be prepared is determined by its relative weight in 
terms of the EU's anti -dumping activity.  
 
Question 5  
Could the European Union disregard data from representative countries if the European 
Commission determines that those countries do not comply with core ILO and relevant 
multilateral environmental conventions?  
Question 6  
Could wo rk and environmental conditions per se  constitute a significant distortion under 
the amended version of Regulation 2016/1036?  
Reply to questions 5 and 6  
Under the amended legislation, the issue of compliance with core social and environmental standards 
is relevant where there may be more than one appropriate representative country from which the 
Commission could source the undistorted benchmarks for calculating normal value.  Where that is 
the case, the Commission will, where appropriate, give preference to a country with  adequate social 
and environmental standards. The aim is to ensure that dumping calculations preferably rely on data 
from a country that abides by core labour and environmental standards, where that is possible.  
In this context, when assessi ng whether countries have an adequate level of social and 
environmental standards, regard will be paid to the ratification of and compliance with the core 
labour ri ghts UN/ILO conventions such as : 
  
-  Freedom of Association and Protection of the Right to Organise Convention, 1948  
-  Right to Organise and Collective Bargaining Convention, 1949  
-  Forced Labour Convention, 1930   
-  Minimum Age Convention, 1973   
 
and environmental conventions, such as:  
 
-  Montreal Protocol on Substances that Deplete the Ozone Layer (1987)  
-  Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their 
Disposal (1989)  
-  The United Nations Framework Convention on Climate Change (1992)  
-  Kyoto Protocol to the United Nations Framework Convention on Climate Change (1998)  
 
 
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